RSM332H1 Lecture Notes - Cash Flow, Net Present Value
Document Summary
It will have a life of 3 years, and will be depreciated straight line to zero salvage value. It will result in sales revenue of per year and cash operating costs of. Use of the machine will require an increase in working capital of for the 3 years, beginning at year 0. The appropriate discount rate is 8% and the firm s tax rate is 40%. Calculate the initial cash flow at time 0. Calculate the annual operating cash flows (they are identical each year). Calculate the relevant terminal cash flows at the end of year 3.
