Yards Sold 100,000

Price per Yard $30

Year 0 1
Revenue $ 3,000,000.00
- Cost of Goods Sold 2,100,000.00
- Depreciation on Plant 50,000.00
- Depreciation on Machinery 200,000.00
Taxable Income $ 650,000.00
- Tax (t=.35) 227,500.00
Net Income $ 422,500.00
+ Depreciation Expense $ 250,000.00
Operating Cash Flow $ 672,500.00

Gross Plant Refurbishment $ (500,000.00) $ 500,000.00

- Accumulated Depreciation 50,000.00
Net Plant Refurbishment $ 450,000.00

10-year ACRS Schedule 0.1

Depreciation Expense Plant 50,000.00

Plant Write OFF

Tax Rate
Plant Tax Savings

Gross Machinery $ (1,000,000.00) $ 1,000,000.00

- Accumulated Depreciation 200,000.00
Net Machinery $ 800,000.00

5-year ACRS Schedule 0.2

Depreciation Expense Machinery 200,000.00

Machinery Write OFF

Tax Rate
Machinery Tax Savings

Working Capital (10% Sales) $ 300,000.00 $ 300,000.00

Change in Working Capital $ (300,000.00) $ -

Sale of Land @ $600,000

- Book Value
Gain on Sale Scrap - BV
Tax on Gain (t=35%) t(gain)
Cash Flow from Sale of Land Scrap - tax
Net Cash Flow $ (1,800,000.00) $ 672,500.00
PV of CF (1,800,000.00) 600,446.43
Cumulative PV (1,800,000.00) (1,199,553.57)

Sale of Land @ $1,500,000

- Book Value
Gain on Sale Scrap - BV
Tax on Gain (t=35%) t(gain)
Cash Flow from Sale of Land Scrap - tax

Net Cash Flow (1,800,000.00) 672,500.00

PV of CF (1,800,000.00) 600,446.43
Cumulative PV (1,800,000.00) (1,199,553.57)

Sale of Land @ $1,500,000 in real terms adj for 4% inflation per year
- Book Value
Gain on Sale Scrap - BV
Tax on Gain (t=35%) t(gain)
Cash Flow from Sale of Land Scrap - tax

Net Cash Flow (1,800,000.00) 672,500.00

PV of CF (1,800,000.00) 600,446.43
Cumulative PV (1,800,000.00) (1,199,553.57)

Sell Land Today for $1,500,000 $ 1,500,000.00

- Book Value 10,000.00
Gain on Sale 1,490,000.00
Tax on Gain (t=35%) 521,500.00
Cash Flow from Sale of Land $ 978,500.00
 100,000 100,000 100,000 100,000
$30 $30 $30 $30

2 3 4 5
$ 3,000,000.00 $ 3,000,000.00 $ 3,000,000.00 $ 3,000,000.00
2,184,000.00 2,271,360.00 2,362,210.00 2,456,700.00
90,000.00 72,000.00 57,600.00 46,100.00
320,000.00 192,000.00 115,200.00 115,200.00
$ 406,000.00 $ 464,640.00 $ 464,990.00 $ 382,000.00
142,100.00 162,624.00 162,746.50 133,700.00
$ 263,900.00 $ 302,016.00 $ 302,243.50 $ 248,300.00
$ 410,000.00 $ 264,000.00 $ 172,800.00 $ 161,300.00
$ 673,900.00 $ 566,016.00 $ 475,043.50 $ 409,600.00

$ 500,000.00 $ 500,000.00 $ 500,000.00 $ 500,000.00

140,000.00 212,000.00 269,600.00 315,700.00
$ 360,000.00 $ 288,000.00 $ 230,400.00 $ 184,300.00

0.18 0.144 0.1152 0.0922

90,000.00 72,000.00 57,600.00 46,100.00

184,300.00
0.35
64,505.00

$ 1,000,000.00 $ 1,000,000.00 $ 1,000,000.00 $ 1,000,000.00

520,000.00 712,000.00 827,200.00 942,400.00
$ 480,000.00 $ 288,000.00 $ 172,800.00 $ 57,600.00

0.32 0.192 0.1152 0.1152

320,000.00 192,000.00 115,200.00 115,200.00

57,600.00
0.35
20,160.00

$ 300,000.00 $ 300,000.00 $ 300,000.00 $ -

$ - $ - $ - $ 300,000.00

$ 600,000.00
10,000.00
590,000.00 Year
206,500.00 Investment Cash Flows
$ 393,500.00 Operating Cash Flow
 Terminal Cash Flows
$ 673,900.00 $ 566,016.00 $ 475,043.50 $ 1,187,765.00 Net Cash Flow
537,228.95 402,879.01 301,898.73 673,969.76 PV of Cash Flow
(662,324.62) (259,445.61) 42,453.12 716,422.88 Cumulative PV

$ 1,500,000.00 Year
10,000.00 Investment Cash Flows
1,490,000.00 Operating Cash Flow
521,500.00 Terminal Cash Flows
$ 978,500.00 Net Cash Flow
PV of Cash Flow
673,900.00 566,016.00 475,043.50 1,772,765.00 Cumulative PV
537,228.95 402,879.01 301,898.73 1,005,914.47
(662,324.62) (259,445.61) 42,453.12 1,048,367.59

$ 1,824,979.35
10,000.00
1,814,979.35
635,242.77 Year
$ 1,189,736.58 Investment Cash Flows
Operating Cash Flow
673,900.00 566,016.00 475,043.50 $ 1,984,001.58 Terminal Cash Flows
537,228.95 402,879.01 301,898.73 $ 1,125,775.78 Net Cash Flow
(662,324.62) (259,445.61) 42,453.12 1,168,228.90 PV of Cash Flow
Cumulative PV
 0 1 2 3 4 5
$ (1,800,000.00)
$ 672,500.00 $ 673,900.00 $ 566,016.00 $ 475,043.50 $ 409,600.00
 778,165.00
$ (1,800,000.00) $ 672,500.00 $ 673,900.00 $ 566,016.00 $ 475,043.50 $ 1,187,765.00
(1,800,000.00) 600,446.43 537,228.95 402,879.01 301,898.73 673,969.76
(1,800,000.00) (1,199,553.57) (662,324.62) (259,445.61) 42,453.12 716,422.88

0 1 2 3 4 5
(1,800,000.00)
672,500.00 673,900.00 566,016.00 475,043.50 409,600.00
1,363,165.00
(1,800,000.00) 672,500.00 673,900.00 566,016.00 475,043.50 1,772,765.00
(1,800,000.00) 600,446.43 537,228.95 402,879.01 301,898.73 1,005,914.47
(1,800,000.00) (1,199,553.57) (662,324.62) (259,445.61) 42,453.12 1,048,367.59

0 1 2 3 4 5
(1,800,000.00)
672,500.00 673,900.00 566,016.00 475,043.50 409,600.00
1,574,401.58
(1,800,000.00) 672,500.00 673,900.00 566,016.00 475,043.50 1,984,001.58
(1,800,000.00) 600,446.43 537,228.95 402,879.01 301,898.73 1,125,775.78
(1,800,000.00) (1,199,553.57) (662,324.62) (259,445.61) 42,453.12 1,168,228.90