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A. Calculate Net Present Value of the Windmill venture by completing the table below. I need step by step explanation plus answer thanks. A number
A. Calculate Net Present Value of the Windmill venture by completing the table below.
I need step by step explanation plus answer thanks.
A number of windmills are to be constructed on the southern frontier to generate electricity. They will cost $412,000 and will last 10 years, at which time they will have an estimated salvage value of $25,000. However, a capital upgrade of $92,000 will be required at the end of five years. An Inventory of spare parts (working capital) amounting to $10,000 will be required during the term of the venture and will be housed in a warehouse that is currently not being used, but which has been used for Quixotic's previous ventures. The warehouse could be rented out at $5,000 per year. This enterprise is expected to generate cash from the sale of electricity of $140,000 a year for 10 years. Cash expenses for each of the 10 years will be $10,000. The company's tax rate is 27 percent, the CCA rate is 8 percent and the cost of capital is 19 percent. Requirements: A. Calculate the Net Present Value of the Windmill venture by completing the table below: (You need a number for every cell in this spreadsheet.) Event Expected Cash Flow After-tax Cash Flow Present Value Enter cash receipts as positive numbers, cash payments as negative numbers. Round all your answers to zero decimal places. Inital Investment 412000 412000 412000 -10000 -10000 -10000 Working Capital Revenues Expenses Opportunity Cost Capital Upgrade Salvage Working Capital Revcovery CCA Tax Shield Net present value N/A N/A N/A N/A Brou wwwStep by Step Solution
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