YEAR

Forecast Revs
Present value
Fixed Costs
Present value
NPV

1
2.50

2
2.50

3
2.50

4
2.50

5
2.50

6
2.50

7
2.50

8
2.50

0.70

0.70

0.70

0.70

0.70

0.70

0.70

0.70

13.837
4.347
-2.510
11.68
6.63
9.44
14.9
7.60
19.22
6.10
20.90
4.86
20.85
3.86
19.7
3.03
18.0
2.35
15.95

CASH FLOW
PV

1.80
13.977

INV
NPV

12.00
1.977

ABANDONMNT
OPTION VALUE

4.487

1.35
11.31

4.86
14.41

3.03
14.91

1.80
12.58

3.86
9.78

2.35
11.43

1.35
10.18

3.03
6.63
2.35
8.40

1.80
9.02
1.35
8.92

0.98
8.60
0.67
8.57

4.86
6.63

3.03
11.18

1.80
10.95

0.98
9.54

6.10
11.8

3.86
15.23

2.35
13.90

7.60
6.63

1.80
6.63
1.35
7.48

0.98
7.64
0.67
7.74

0.42
8.15

0.98
6.63
0.67
6.98

0.42
7.35
0.22
7.74

0.42
6.63
0.22
6.98

0.05

0.05

7.35

6.63
-0.08
6.98
-0.20
6.63

CAPEX

10.00
12
2.5
0.00%
9.00%
0.7

INVEST =
C1 =
growth =
R=
FC =
RF = 6.00%
Std. Dev. = 20.0%
up = 1.221403
down = 0.819
prob = 0.382
1 - prob = 0.618
Salvage t = 0
10
Dpn factor =
5%
PV Yr-8 salvage 4.162382

SALVAGE VALUE (years 1-8)

9.50

9.03

8.57

8.15

7.74

7.35

6.98

6.63