Guys, dunno if its something I’m missing in the Replacement Project Analysis Example…I cant seem to get to the answer they’ve got in the Terminal CashFlow when I plug the numbers into the the number 3 formula on page 237 i.e. TNOCF…And the displayed solution that says TNOCF = 4000 + 3000 - 0.4( 4000 - 0) looks like some short form of the long way around, struggling to follow…Please help! Thank you in advance…
The long form would be
TNOCF = 4000 + 3000 - 0.4( 4000 - 0) - (0 - 0)
As salvage of the old printer and the book value are both zero.
What I’m struggling with is why that last part isn’t based on the forgone tax saving, which would make the formula:
TNOCF = 4000 + 3000 - 0.4( 4000 - 0) - 0.4 (0 - 0)