The TaT Company wants to invest in a new product. To do this, they mustinvest in a new machine. The purchase price of this machine is$300,000 and the company choose for a straight-line depreciation of10%.


Thefollowing table shows an overview of the expected sales revenues forthe 3 coming years. Thecompany assumes that the turnover is spread evenly over the year.






2014
2015
2016



$252,000
$756,000
$850,500








Thecompany expects to realize a gross margin (sales revenues – COGS)of 25% of the cost of goods sold. The trade debtors collection periodwas fixed on 30 days and the trade creditors period on 60 days. Theexpected tax rate is 35% and the company expects to pay the taxesevery next year.


Otheruseful information: discount rate : 10%, a year : 360 days and 12months.






Compute the NPV for this project. (1.5 marks)


Cash-In 2014 2015 1016



Revenues 252000 756000 850500
Collection current year 210000 630000 708750
Collection previous year 42000 126000

TOT Cash-In 210000 672000 708750



Cash-Out

COGS 201600 604800 680400
Payment current year 184800 554400 623700
Payments last year 16800 50400
Depreciation 30000 30000 30000
Taxes 7140 126000
TOT Cash out


Cashflow -4800 63660 88030


NPV= -4800/1.1+63660/11²+88030/(1.1*1.1*1.1) - 300000

NPV- 1569054



Could somebody check if the NPV I calcualted is correct please?

Thank you very much!