50 - CL1

A

Year	Investment A	Investment B
0	($5,000,000)	($5,000,000)	Opportunity cost	22%
1	$1,500,000	$1,250,000
2	$1,500,000	$1,250,000
3	$1,500,000	$1,250,000
4	$1,500,000	$1,250,000
5	$1,500,000	$1,250,000
6	$1,500,000	$1,250,000
7	$2,000,000	$1,250,000
8	0	$1,600,000
Payback
NPV
IRR
PI

C_Information

Year	1	2	3	4
IRS 3-year Depreciation rates	33.33%	44.45%	14.81%	7.41%
Depreciation expense	-	-	-	-
Cost of machine
Salvage value
Tax rate
Tax	0
After tax proceeds	0	Move to terminal value next worksheet

C-Solution

Year	0	1	2	3	4
Sale quantity
Unit price
Sale revenue	-	-	-	-
Fixed costs
Variable costs	-	-	-	-
Depreciation expense
EBIT	-	-	-	-
Tax expense (38%)	-	-	-	-
Net income	-	-	-	-
Operating cash flow (EBIT+Dep-Tax)	-	-	-	-
After tax cash from salvage value
After tax cash from sale of land
Recovery of NWC
Terminal cash flow	-
Initial cash flow
Opportunity cost of land
Net working capital
Cost of new machine
Initial cash flow	-
Cash flow from assets	-	-	-	-	-
Discount rate
NPV	-
IRR	ERROR:#NUM!

1

2

3

4

5

6

A

B

Year

Investment A

0

($5,000,000)

1

$1,500,000

2

$1,500,000

3

$1,500,000

4

$1,500,000