At the end of 5th

year 6
Cost of new machine -50
Sale of old machine 5.6953125
Tax benefit 0.284765625

Cash outflow -44.02

Cost benefit after tax 5.2
Benefit from depreciation after tax 3.7520751953
Sale of new machine
Tax benefit on loss of sale

OCF -44.02 8.95

DF 1 0.9123851773
NCF -44.019921875 8.1677407143

1
Value 30 22.5
Old depreciation 7.5

Value
New depreciation

Equity 100
10% Debt 100
10.25% Debt 44.02
244.02
Year Cash Flow
0 -44.02
1 8.95
2 8.01
3 7.31
4 6.78
5 16.35
NPV -8.5884371890120
IRR 2%
 7 8 9 10

5.2 5.2 5.2 5.2

2.8141 2.1105 1.5829 1.1872
9.4922
0.4746

8.01 7.31 6.78 16.35

0.8324 0.7595 0.693 0.6323
6.6713 5.5524 4.7003 10.34 -8.588

2 3 4 5 6 7 8 9 10
16.875 12.656 9.4922 7.1191 5.3394 4.0045 3.0034 2.2525 1.6894
5.625 4.2188 3.1641 2.373 1.7798 1.3348 1.0011 0.7508 0.5631

50 37.5 28.125 21.094 15.82 11.865

12.5 9.375 7.0313 5.2734 3.9551

0.4098 0.14 0.0574

0.4098 0.065 0.0266
0.1804 0.0666 0.012
1 9.60%
 At the
end of
5th
year 6 7 8 9
Cost of new machine -60
Sale of old machine 7.59375
Tax benefit 0.37969

Cash outflow -52.03

Cost benefit after tax 6.5 6.5 6.5 6.5
Benefit from depreciation after tax 4.4194 3.3146 2.4859 1.8644
Sale of new machine
Tax benefit on loss of sale

OCF -52.03 10.92 9.81 8.99 8.36

DF 1 0.9375 0.8789 0.8239 0.7724
NCF -52.027 10.237 8.6256 7.4035 6.4605

1 2 3 4
Value 40 30 22.5 16.875 12.656
Old depreciation 10 7.5 5.625 4.2188

Value
New depreciation

100 0.3968 14% 0.0951

100 0.3968 6.50%
52.03 0.2064 6.67%
252.03 1
 10

6.5
1.3983
11.391
0.5695

19.86
0.7241
14.379 -4.921

5 6 7 8 9 10
9.4922 7.1191 5.3394 4.0045 3.0034 2.2525
3.1641 2.373 1.7798 1.3348 1.0011 0.7508

60 45 33.75 25.313 18.984 14.238

15 11.25 8.4375 6.3281 4.7461