Present value Cash flow: one-time investment cost now of $360,000

Jay Tanaka

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Apr 10, 2018
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Hi guys, I have a Exam tomorrow on intro Finance class. I'm having a difficulty trying to solve this question... if anyone can help, I'd greatly appreciate it!

Q.) What is the net present value of the following cash flows: 1.) one-time investment cost now of $360,000, 2.) revenues of $87,000 for 10 years, 3.) cost of $7000 for 10 years, and 4.) lease payments at the beginning of each year of $12,000 for 10 years with a tax rate of 25 percent and a before tax discount rate of 8 percent?
 
You WILL have to set up a timeline and put all the cash flows on it. Make sure they all go the right direction.
 
Looks like Jay didn't come back!

I'm a bit confused with that problem.
TK, d'you agree with this:

First, to keep it a bit simpler, assume the annual lease
of $12,000 is at end of year.
We then have net annual flow of:
87,000 - 12,000 - 7,000 - 17,000(taxes) = 51,000

Could lead something. :)
 
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