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NPV project analysis question

Forums › ACCA Forums › General ACCA Forums › NPV project analysis question

  • This topic has 0 replies, 1 voice, and was last updated 11 years ago by maria.
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  • May 21, 2014 at 10:31 pm #170003
    maria
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    • Topics: 1
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    • ☆

    Hi,

    A 5 year project requires two investments of building extension and machinery. The building costs 300,000, and is depreciated at 20% diminishing value over 10 years.
    The machinery costs 1,000,000 and is depreciated over 5 years, and salvage value at the end of 5 years will be zero.
    working capital is accounted for at 10% of sales, which is 300,000 year, and is fully recovered at the end.

    How do I include these in m y spreadsheet? A bit confused because the salvage value for machinery is zero, and the building is depreciated over 10 years. Also do I add working capital every year, or just the first year?

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