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    Managerial Economics (Chapter 14)

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    api-3703724
    The document presents the estimated cash flow projections for a 5 year project. It shows the sales, variable costs, fixed costs, depreciation, profits before and after taxes, and net cash flow for each year. The net cash flow increases each year. At the end of year 5, there is also a salvage value of equipment, recovery of working capital, and a total net cash flow of $779,230.

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    Download as XLS, PDF, TXT or read online from Scribd

    Managerial Economics (Chapter 14)

    Uploaded by

    api-3703724
    286 views4 pages
    The document presents the estimated cash flow projections for a 5 year project. It shows the sales, variable costs, fixed costs, depreciation, profits before and after taxes, and net cash flow for each year. The net cash flow increases each year. At the end of year 5, there is also a salvage value of equipment, recovery of working capital, and a total net cash flow of $779,230.

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    The document presents the estimated cash flow projections for a 5 year project. It shows the sales, variable costs, fixed costs, depreciation, profits before and after taxes, and net cash flow for each year. The net cash flow increases each year. At the end of year 5, there is also a salvage value of equipment, recovery of working capital, and a total net cash flow of $779,230.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    286 views4 pages

    Managerial Economics (Chapter 14)

    Uploaded by

    api-3703724
    The document presents the estimated cash flow projections for a 5 year project. It shows the sales, variable costs, fixed costs, depreciation, profits before and after taxes, and net cash flow for each year. The net cash flow increases each year. At the end of year 5, there is also a salvage value of equipment, recovery of working capital, and a total net cash flow of $779,230.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    of 4

    Estimated cash flow from project

    year
    1 2 3 4 5
    Sales less : $1,000,000 $1,100,000 $1,210,000 $1,331,000 $1,464,100
    variable costs 500,000 550,000 605,000 665,500 732,050
    fixed costs 150,000 150,000 150,000 150,000 150,000
    Depreciation 200,000 200,000 200,000 200,000 200,000
    Profits before taxes $150,000 $200,000 $255,000 $315,500 382,050
    Less: income tax 60,000 80,000 102,000 126,200 152,820
    Profit after tax $90,000 120,000 153,000 189,300 229,230
    plus: Depreciation 200,000 200,000 200,000 200,000 200,000
    Net cash flow $290,000 $320,000 $353,000 $389,300 $429,230
    Plus: salvage value of equipment 250,000
    Recovery ofworking capital 100,000
    Net cash flow in year 5 $779,230
    project
    year (t) cash flow (2) present value interest factor at 15 percent (3)
    0 ($2,500,000) 1
    1 600,000 0.87
    2 800,000 0.76
    3 800,000 0.66
    4 600,000 0.57
    5 250,000 0.5

    8%
    Present value (4)= (2) x (3)
    ($2,500,000)
    $521,742
    $604,912
    $526,016
    $343,050
    $124,295
    ($379,985)

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