Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

If we have a salvage value of a machine and also the recovery of the initial working capital investment. For example. Salvage value is 5000

If we have a salvage value of a machine and also the recovery of the initial working capital investment. For example. Salvage value is 5000 after 4 years, working capital investment is 100000 and it recovers in four years. Initially, Equipment cost is 100000, discount rate is 10% and tax rate is 30%. Cash flows four fours years are same at 100000. While calculating Net present Value,

what will be the cash flow for year 4?

Do we need to add salvage value and working capital investment recovery to calculate cash flow of year 4?

Is there any relation of tax rate?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Science The Art Of Modeling With Spreadsheets

Authors: Stephen G. Powell, Kenneth R. Baker

3rd Edition

0470530677, 978-0470530672

More Books

Students also viewed these Finance questions