# Help!!!! Capital budgeting - npv method

##### Shobhit Jain View Profile My Other Post
2nd Year Article

In NPV method, if in a particular project a machine is used and it has a resale value of 10000 which is equal to its written down value at end of last year then what will be the terminal value as per this method???? I mean do we consider this value of 10000 while calculating the Present Value of Cash Inflows???

##### sunitha balachandar View Profile My Other Post
CA Final

Hi shobhit,

Can u  post the question in detail?

##### Shobhit Jain View Profile My Other Post
2nd Year Article

Hi Sunitha

Following are the relevant details of the question.

X Ltd is considering an Investment Project of Rs1.5 Lakhs and it will have a scrap value of Rs 10000 at the end of 5 years. Transportation and installation charges are Rs 5000 and 25000 respectively. Also, a spare part inventory of Rs 10000 must be maintained (Scrap Value 60% of Initial cost after 5 years). The depreciation for 5 years is as follows: (Cost of Capital - 12%)

Year 1 - 72000, Year 2 - 43200, Year 3 - 32400, Year 4 - 21600, Year 5 - 800

Tax for 5 years - Year 1 - 11200, Year 2 - 22720, Year 3 - 27040, Year 4 - 31360, Year 5 - 39680

##### sunitha balachandar View Profile My Other Post
CA Final

Hi ,

Where is the cash inflows?

##### Shobhit Jain View Profile My Other Post
2nd Year Article

Hi

Expected annual revenue is Rs 170000 and Labour and material and Maintainence expenses are estimated to be Rs 15000, Rs 50000 & Rs 5000 respectively.

##### sunitha balachandar View Profile My Other Post
CA Final

Hi,

The sale value is the cash inflow and it should be included in finding the terminal cash inflow.For tax purpose the STCG will be zero since(sale value=WDV).correct me if i am wrong.

##### Shobhit Jain View Profile My Other Post
2nd Year Article

got it......thanks Sunitha