Professional Documents
Culture Documents
Existing New
machine machine
Book value 35,000 -
Cost - 1,800,000
Useful life 10 10
SL depreciation 3,500 180,000
Current salvage value 75,000 -
Salvage value after 10 years 125,000 180,000
Annual op. cost 600,000 250,000
Inflation rate 5%
Risk-free rate 6%
Risk premium 7%
Risk premium (replacement) 4%
Discount rate (replacement) 5% + 6% + 4% 15%
Tax rate 35%
117,000
-81250
234,009 223,121 211,688 199,684 222,830