Computation of Net Cash Flows for the new product, Finance, Other Engineering

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Computation of Net Cash Flows for the new product:

$ In 000
Year 0 1 2 3 4 5 6
1. Investment -1,000 0 149 482 546 462 365
2. Profit after tax 250 188 141 105 79 59
3. Depreciation -20 -10 -20 -20 0 40
4. ? NWC 240 317 603 651 581 581
5. Cash flows From operations (2 + 3 + 4) 127
6. After-tax SV [100 - .35(100-178)]
7. Net cash flows (1 + 5 + 6) -1020 240 317 603 651 581 581
8. Present value factor at 18% 1000 .847 .718 .609 .516 .437 .370
9. Present value (8 × 9) -1020 203 228 367 336 254 215
10. NPV +583
The net cash flows may be summarised as follows:

Year 0 1 2 3 4
5 6
Net cash flows 1020 240 317 603 651 581 581

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