1. Initial investment 2. Revenues 3. Cash operating costs 4. Tax depreciation 5. Income pretax 6. Tax at 40% 7. Net income 8. After-tax salvage 9. Cash flow (7 +8+4-1) NPV at 20% = 0 - 100 -100 100 50 33.33 16.67 6.67 10 +43.33 2 100 50 33.33 16.67 6.67 10 +43.33 3 100 50 33.33 16.67 6.67 10 15 +58.33

1. Initial investment 2. Revenues 3. Cash operating costs 4. Tax depreciation 5. Income pretax 6. Tax at 40% 7. Net income 8. After-tax salvage 9. Cash flow (7 +8+4-1) NPV at 20% = 0 - 100 -100 100 50 33.33 16.67 6.67 10 +43.33 2 100 50 33.33 16.67 6.67 10 +43.33 3 100 50 33.33 16.67 6.67 10 15 +58.33

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 9EP

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