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Help with Net Present Value question with immediate write off?
Hi
I have the following Net Present Value question: New 10 year project - Investments required: - Patent (Cost $1.5 million) depreciated Straight Line @ 25% - Software (Cost $1 million) immediately written off - Additional Net working capital =$200,000 Sales (units) - 5000(year 1), and increases by 10%(years 2-5) and stablizes (years 6-10) Selling Price =$500/unit Production cost =$350/unit Software maintenance expense =$50,000/year Selling and administration expense =$750,000/year Additional Overhead =$250,000/year Cost of capital =12% I am confused about how to record the immediate write off the software in order to calculate my Net present value correctly. Can somebody please answer this for me? Thanks |
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