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Corporate finance Essay Example | Topics and Well Written Essays - 750 words - 2

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Corporate finance - Essay ExampleTherefore, the depreciation for the last is uniform and equal to $ 9,143.In the second scenario, a brand new control system at a cost of $600,000 is installed. The revenue remains the same, but the operational costs are reduced to $1,020,000. The calculation of revenue, operational costs, tax depreciation, and pre-tax profit, company’s tax, after tax income, cash flow, present value and net present value are calculated as in the first scenario.In the two scenarios, overhauling mark 1 would take it out of service for 6 months and it would resume commercial operation after an year. In the calculation done, the revenue is obtained starting second year and the operational costs are calculated from second year. The tax depreciation however, starts from the first year and the after tax income for the first year is seen to be negative meaning a loss is incurred in the first year since investment have been made yet no revenue is earned.

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