Question
Is HP should accept the project as the NPV is positive $3.40 Million as below (assumed NWC gets freed at the end of the project):
Is HP should accept the project as the NPV is positive $3.40 Million as below (assumed NWC gets freed at the end of the project):
please show work
| Year | Investments | Depreciation | Salvage | NWC | Revenue | Fixed Costs | Variable Costs | PBT | Tax | PAT | Net Cashflow |
| a | b | c | d | e | f | g | h | i | j | h | k |
| b/6 years | 30% X f | f-g-h-c | i X 30% | i - j | h-b+d-e+c | ||||||
| 0 | -30 | -3.00 | -33.00 | ||||||||
| 1 | -5 | -3.12 | 50.00 | -30.00 | -15.00 | 0.00 | 0.00 | 0.00 | 1.88 | ||
| 2 | -5 | -3.24 | 55.00 | -30.00 | -16.50 | 3.50 | -1.05 | 2.45 | 4.21 | ||
| 3 | -5 | -3.37 | 60.50 | -30.00 | -18.15 | 7.35 | -2.21 | 5.15 | 6.77 | ||
| 4 | -5 | -3.51 | 66.55 | -30.00 | -19.97 | 11.59 | -3.48 | 8.11 | 9.60 | ||
| 5 | -5 | -3.65 | 73.21 | -30.00 | -21.96 | 16.24 | -4.87 | 11.37 | 12.72 | ||
| 6 | -5 | 2.5 | 3.65 | 80.53 | -30.00 | -24.16 | 21.37 | -6.41 | 14.96 | 26.11 | |
| NPV @ 12% (spreadsheet fx.) | 3.40 |
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
