Cost of proposed machine 380,000

add: Installation Cost 20,000

Installed Cost of Proposed Machine 400,000
Proceeds from Sale of Present Machine 280,000
less: Tax on sale of present machine 73,600
less: After-tax proceeds from sale of present machine 206,400
Change in net working Capital 17,000
Initial Investment 210,600
depreciation 5
value 240,000 48,000
book value 96000
purchase cost 280,000.00 Sale of asset 280,000
gain 184,000.00 less: book value (3rd yr) 96,000
less tax (40%) 73600 Gain 184,000
gain 110,400.00 less: Tax (40%) 73,600
 Year
With proposed machine 1 2 3 4 5
Revenue 2,520,000 2,520,000 2,520,000 2,520,000 2,520,000
less: Expenses 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000
EBDIT 220,000 220,000 220,000 220,000 220,000
less: Depreciation 80,000 80,000 80,000 80,000 80,000
EBIT 140,000 140,000 140,000 140,000 140,000
less: Taxes (40%) 56,000 56,000 56,000 56,000 56,000
NOPAT 84,000 84,000 84,000 84,000 84,000
add: Depreciation 80,000 80,000 80,000 80,000 80,000
Operating Cash Flow 164,000 164,000 164,000 164,000 164,000

Year
With present machine 1 2 3 4 5
Revenue 2,200,000 2,300,000 2,400,000 2,400,000 2,250,000
less: Expenses 1,990,000 2,110,000 2,230,000 2,250,000 2,120,000
EBDIT 210,000 190,000 170,000 150,000 130,000
less: Depreciation 48,000 48,000
EBIT 162,000 142,000 170,000 150,000 130,000
less: Taxes (40%) 64,800 56,800 68,000 60,000 52,000
NOPAT 97,200 85,200 102,000 90,000 78,000
add: Depreciation 48,000 48,000 0 0 0
Operating Cash Flow 145,200 133,200 102,000 90,000 78,000

Year
1 2 3 4 5
Net Cash Flow (Incremental) 18,800 30,800 62,000 74,000 86,000
 Proceeds from sale of New Asset 50,000
less: Tax on sale of New Asset 20,000
After-tax proceeds from sale of new asset 30,000
Change in Net Working Capital (less) 17,000
Terminal Cash Flow 13,000
Initial Investment

1 Cost of proposed machine 140,000

add: Installation Cost 10,000
Installed Cost of Proposed Machine 150,000
Proceeds from Sale of Present Machine 42,000
less: Tax on sale of present machine 8,600
less: After-tax proceeds from sale of present machine 33,400
Change in net working Capital 20,000
Initial Investment 136,600

Sale of asset 42,000

less: book value (3rd yr) 13,333
Gain 28,667
less: Tax (30%) 8,600

2 Cost of proposed machine 1,175,000

add: Installation Cost 0
Installed Cost of Proposed Machine 1,175,000
Proceeds from Sale of Present Machine 265,000
less: Tax on sale of present machine 19,500
less: After-tax proceeds from sale of present machine 284,500
Change in net working Capital 20,000
Initial Investment 910,500

Sale of asset 265,000

less: book value (3rd yr) 200,000
Gain 65,000
less: Tax (30%) 19,500