✏️ 3 year example

You are starting a short term business.

You will need to make an initial capital expenditure of $10M immediately. The project will be active in the coming year and in the following year - ie, for two years, starting now. During each of those two years, you will be able to depreciate $2M. [DON’T MAKE THIS MORE COMPLICATED.] There will also be $8M of non-depreciation expenses and $28M of revenue. Your net working capital requirements rise by $1.2M during the two year that your project is in operation. Your tax rate is 15% and your discount rate is 12%. What is the PV of this business. Is it a good investment?

3 year example - Spreadsheet

Excel Google Sheets

Download: 3 Year Example.xlsx