Question

Calculate the NPV of an asset replacement given the following information: Investment = $300,000; salvage recovered...

Calculate the NPV of an asset replacement given the following information: Investment = $300,000; salvage recovered now = $50,000; operating cash flows = $225,000; PV of salvage forgone = $10,000; PV of salvage recovered = $20,000; CCATS = $50,000.

Multiple Choice

  • $25,000

  • $55,000

  • $65,000

  • $35,000

  • $45,000

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Answer #1

Based on the given data, pls find below details, their nature and consideration in cash flow:

Details Nature $
Investment Outflow         -3,00,000
Salvage recovered Now Inflow             50,000
Operating Cash Flows Inflow          2,25,000
PV of Salvage Foregone Outflow            -10,000
PV of Salvage recovererd Inflow             20,000
CCATS Inflow             50,000
Net Present Value             35,000
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