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1 2 3 Discount rate 4 0.0% C D F H E Blue cells can be modified 5 Now 1 2 3 4 5
1 2 3 Discount rate 4 0.0% C D F H E Blue cells can be modified 5 Now 1 2 3 4 5 6 Purchase of equipment $ (420,000) 7 Investment in working capital $ (80,000) 8 Overhaul of equipment $ (50,000) 9 Salvage value of the equipment $ 30,000 10 Working capital released 11 Sales 12 Variable expenses $ 80,000 $ 850,000 $ 850,000 $ 850,000 $ 850,000 $ 850,000 $ (500,000) $ (500,000) $ (500,000) $ (500,000) $ (500,000) 13 Fixed out-of-pocket operating costs $ (200,000) $ (200,000) $ (200,000) $ (200,000) $ (200,000) 14 Total cash flows (a) $ (500,000) $ 150,000 $ 150,000 $ 15 Discount factor (b) 1.000 1.000 16 Present value of cash flows (a) x (b) $ (500,000) $ 150,000 $ 1.000 150,000 $ 100,000 1.000 100,000 $ $ 150,000 $ 260,000 1,000 150,000 $ 1.000 260,000 17 Net present value (SUM B16:G16) $ 310,000 18 19 20 21 22 23 A Template
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