Annuity depreciation - PM

Annuity Depreciation
Cost = $634,000
Life = 4 years
Annual cash inflow = $200,000
NPV = $634,000 + $200,000(A4,r) = 0
A4,r = $634,000/$200,000
A4,r = 3.170
R = 10%

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Annuity depreciation - PM

Year Capital Depreciation Profit ROCE Interest RI

employed @ 8%
1 634,000 136,600 63,400 10% 50,720 12,680
2 497,400 150,260 49,740 10% 39,792 9,948
3 347,140 165,286 34,714 10% 27,771.2 6,942.8
4 181,854 181,814.6 18,185.4 10% 14,548.3 3,637.1
33,207.9

NPV

Year Cash flows PV factor @ 8% PV

0 (634,000) 1.000 (634,000)
1-4 200,000 3.312 662,400
28,400

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