In: Accounting
Net revenues at an older manufacturing plant will be $2 million this year. The net revenue will decrease by 15% per year for 5 years, when the assembly plant will be closed (at the end of year 6). If the firm's interest rate is 10%, calculate the PW of the revenue stream. Use excel functions and a table.
Year | Cash flow | Present Value | PW |
1 | 2000 | 0.9091 | 1,818 |
2 | 1700 | 0.8262 | 1,405 |
2000-(2000*15%) | |||
3 | 1445 | 0.7513 | 1,086 |
1700-(1700*15%) | |||
4 | 1228 | 0.683 | 839 |
1445-(1445*15%) | |||
5 | 1044 | 0.6209 | 648 |
1228-(1228*15%) | |||
6 | 887 | 0.5645 | 501 |
1044-(1044*15%) | |||
Total | PW | 6,296 | |
PW | 6.296 million |