[FONT=Arial, serif][SIZE=3]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%. [/SIZE][/FONT]


[FONT=Arial, serif][SIZE=3]Thefollowing table shows an overview of the expected sales revenues forthe 3 coming years. [/SIZE][/FONT][FONT=Arial, serif][SIZE=3]Thecompany assumes that the turnover is spread evenly over the year[/SIZE][/FONT].

[FONT=Arial, serif][SIZE=3]2014[/SIZE][/FONT] [FONT=Arial, serif][SIZE=3]2015[/SIZE][/FONT] [FONT=Arial, serif][SIZE=3]2016[/SIZE][/FONT]

[FONT=Arial, serif][SIZE=3]$252,000[/SIZE][/FONT] [FONT=Arial, serif][SIZE=3]$756,000[/SIZE][/FONT] [FONT=Arial, serif][SIZE=3]$850,500[/SIZE][/FONT]

[FONT=Arial, serif][SIZE=3]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.[/SIZE][/FONT]


[FONT=Arial, serif][SIZE=3]Otheruseful information: discount rate : 10%, a year : 360 days and 12months.[/SIZE][/FONT]






[FONT=Arial, serif][SIZE=3]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 [/SIZE][/FONT]30000 30000[FONT=Arial, serif][SIZE=3]
Taxes 7140 126000
TOT Cash out


Cashflow -4800 63660 88030


NPV= [/SIZE][/FONT] -4800/1.1+63660/11²+88030/(1.1*1.1*1.1) - 300000
[FONT=Arial, serif][SIZE=3]
NPV- 1569054


[/SIZE][/FONT]
Could somebody check if the NPV I calcualted is correct please?

Thank you very much!