# Thread: CAPITAL BUDGETING - Net present value / NVP

1. ## CAPITAL BUDGETING - Net present value / NVP

Hello to all,

I am a bit confused and hoping for some help on this question. I have my final exam in a couple days and this was a review question provided by my lecturer. Unfortunately she is now extremely difficult to get a hold of.

Guyana Revenue Authority is evaluating a new scanning machine. The machine requires an initial investment of $150,000. The expected return rate is 15% and will generate the following after tax inflows for the next seven (5) years. YEARS CASH INFLOWS 1$30,000
2 $60,000 3 20,000 4 40,000 5 50,000 Annual maintenance cost and insurance cost will be 5 % and 10% of total cash inflows respectively in each of the five (5) years. I would like to know if should take the 5% and the 10% of each cash inflow PER YEAR, subtract that from the figures given above to give a new CASH INFLOW, and actually write that figure down under CASH OUTFLOWS when I draw my table, or am i going wrong here? 2. ## Re: CAPITAL BUDGETING - Net present value / NVP Originally Posted by MekedaH Hello to all, I am a bit confused and hoping for some help on this question. I have my final exam in a couple days and this was a review question provided by my lecturer. Unfortunately she is now extremely difficult to get a hold of. Guyana Revenue Authority is evaluating a new scanning machine. The machine requires an initial investment of \$150,000. The expected return rate is 15% and will generate the following after tax inflows for the next seven (5) years.
YEARS CASH INFLOWS
1 \$30,000 2 \$60,000
3 20,000
4 40,000
5 50,000
Annual maintenance cost and insurance cost will be 5 % and 10% of total cash inflows respectively in each of the five (5) years.

I would like to know if should take the 5% and the 10% of each cash inflow PER YEAR, subtract that from the figures given above to give a new CASH INFLOW, and actually write that figure down under CASH OUTFLOWS when I draw my table, or am i going wrong here?
reposted to fix \\$'s