Yards Sold

Price per Yard
Year
Revenue
- Cost of Goods Sold
- Depreciation on Plant
- Depreciation on Machinery
Taxable Income
- Tax (t=.35)
Net Income
+ Depreciation Expense
Operating Cash Flow

Gross Plant Refurbishment
- Accumulated Depreciation
Net Plant Refurbishment

100,000
$30
0

$(500,000.00)

10-year ACRS Schedule
Depreciation Expense Plant

1
$3,000,000.00
2,100,000.00
50,000.00
200,000.00
$650,000.00
227,500.00
$422,500.00
$250,000.00
$672,500.00

$500,000.00
50,000.00
$450,000.00
0.1
50,000.00

Plant Write OFF
Tax Rate
Plant Tax Savings

Gross Machinery
- Accumulated Depreciation
Net Machinery

$(1,000,000.00)

5-year ACRS Schedule
Depreciation Expense Machinery

$1,000,000.00
200,000.00
$800,000.00
0.2
200,000.00

Machinery Write OFF
Tax Rate
Machinery Tax Savings
Working Capital (10% Sales)
Change in Working Capital
Sale of Land @ $600,000
- Book Value
Gain on Sale
Tax on Gain (t=35%)
Cash Flow from Sale of Land

$300,000.00
$(300,000.00)

Scrap - BV
t(gain)
Scrap - tax

$300,000.00
$-

43 (1.00 600.00) 672.446.000.500.553.00) Sell Land Today for $1.000.800.000 .Book Value Gain on Sale Tax on Gain (t=35%) Cash Flow from Sale of Land $1.00 672.800.199.490.199.000.Book Value Gain on Sale Tax on Gain (t=35%) Cash Flow from Sale of Land $(1.446.43 (1.57) adj for 4% inflation per year Scrap .446.BV t(gain) Scrap .800.Net Cash Flow PV of CF Cumulative PV Sale of Land @ $1.00) (1.000.57) Scrap .00) $672.500.800.500.43 (1.00) (1.00) (1.000.00) (1.00 600.800.tax (1.000.57) .00 10.500.BV t(gain) Scrap .500.800.00) (1.199.800.Book Value Gain on Sale Tax on Gain (t=35%) Cash Flow from Sale of Land Net Cash Flow PV of CF Cumulative PV Sale of Land @ $1.000 .800.00 1.00) (1.553.000.000.800.00 600.000.000.tax Net Cash Flow PV of CF Cumulative PV (1.500.500.00 $978.000.00 521.000 in real terms .500.000.500.553.

500.100.200.000.016.000.456.00 $1.14 72.00 $1.00 0.12 57.210.00 $500.000.000.00 $161.35 64.000.271.00 162.00 $382.50 5 $3.000.00 $302.000 $30 100.100.19 192.00 162.00 320.000.200.00 315.400.000.00 $172.000.000.000 $30 2 $3.35 20.000.000.00 192.100.00 133.00 212.700.200.00 $300.360.18 90.00 $184.00 2.00 46.000.00 0.700.000.000 $30 100.990.50 $302.00 $500.000.000.000.100.000.00 $464.300.043.746.000.00 $480.00 $230.00 4 $3.50 $172.000.000.000.00 0.600.000.12 115.000.640.800.00 $288.00 520.000.160.00 142.00 $566.000.00 10.00 206.00 0.500.00 $500.00 $288.00 0.00 115.00 0.000.00 $409.300.000.00 $57.00 57.00 0.00 590.00 0.000.00 90.000.362.00 $$600.300.00 $464.00 0.00 $1.00 $475.243.00 $- $300.00 2.000.000 $30 100.00 $- $300.000.200.00 $248.00 269.00 2.600.00 $264.00 184.600.32 320.00 0.000.00 $500.000.00 57.00 $673.200.400.000.900.00 3 $3.00 $$300.000.000.000.000.00 2.900.00 Year Investment Cash Flows $393.600.00 $360.184.00 $406.00 72.000.000.000.300.800.016.624.000.000.000.00 $263.00 $410.000.600.00 Operating Cash Flow .00 942.00 115.000.600.09 46.505.00 140.700.12 115.00 827.00 $1.000.00 712.

00 10.016.000.12 $1.000.00 Net Cash Flow 673.979.445.95 (662.736.00 402.765.048.500.00 1.76 PV of Cash Flow 716.50 301.900.016.35 635.62) 566.445.453.228.58 Investment Cash Flows Operating Cash Flow $1.59 Year $1.043.168.969.898.043.324.73 42.73 42.187.979.35 10.01 (259.00 Cumulative PV 1.814.324.879.61) 475.000.490.228.898.242.453.765.125.73 42.898.900.$673.47 1.00 537.824.422.61) $475.58 Terminal Cash Flows $1.77 673.500.00 537.95 (662.00 673.043.228.90 PV of Cash Flow Cumulative PV .88 Cumulative PV Year Investment Cash Flows Operating Cash Flow Terminal Cash Flows $978.00 Net Cash Flow PV of Cash Flow 1.61) 475.228.62) 566.005.914.500.367.879.00 521.016.00 402.95 (662.001.189.00 1.879.324.453.900.12 Terminal Cash Flows $1.984.01 (259.62) $566.01 (259.12 $1.445.50 301.772.00 402.775.78 Net Cash Flow 1.50 301.00 537.000.

900.600.016.00 .500.00 2 3 4 $673.00) 1 $672.800.00 $566.50 5 $409.000.00 $475.043.0 $(1.

446.00 1.324.446.00 402.574.00) 778.165.800.62) 566.445.228.12 0 (1.73 42.005.765.01 (259.500.453.90 0 (1.43 (1.187.73 (1.500.016.800.000.61) 42.00) .00 537.445.000.00) 672.00 566.00 1.879.50 (1.500.228.199.000.00 (1.00) 600.00 $566.00 (1.95 (662.73 42.00) 600.50 (1.401.016.898.00 566.00) 600.900.553.000.00) 672.043.453.800.000.43 537.00 673.898.00 673.47 1.900.984.88 1 2 3 4 5 672.165.446.58 1.016.78 1.879.00 673.000.00) (1.59 1 2 3 4 5 672.00 1.228.000.800.445.58 1.048.00 475.95 402.453.600.000.50 301.000.62) (259.76 716.199.00) (1.553.600.800.01 (259.00 $1.00) $672.00 402.900.57) 673.367.61) 475.199.043.800.95 (662.800.900.12 409.553.43 (1.00 $475.001.50 (1.57) 673.016.898.500.00 $673.914.57) (662.61) 475.016.879.969.772.324.800.800.000.900.363.12 409.00 475.228.043.$(1.00 1.000.800.043.324.125.00) (1.50 301.62) 566.500.043.800.168.01 301.00 537.422.775.765.