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Further aspects of investment appraisal

2.2 Proforma
T=0 T=1 T=2 T=3

$ $ $ $
Cash inflows X X

Cash outflows (X) (X)
–––– ––––
Net CF X X
Tax on net cash flow (X) (X) (X)

Investment (X)
Scrap value X

Tax depreciation savings X X X
Working capital (X) X
Net cash flows (X) X X X

Discount factor 1 x x x
Present Value PV PV PV PV

Illustrations and further practice

Now attempt example 4 ‘Colusa Ltd’ from Chapter 11.

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