Sophea Ly (u5123854)

Student Information
Name : Sophea Ly
Graduate Diploma, IDEC 8001

Page 1 of 12

Student ID:
u5123854
Email. Sophea.ly@anu.edu.au

Agriculture Project: Cotton Production

Table1: Project Parameter Table ( Original Form)
Project Life (years)
Project Output volume (tonnes)
Output price -World price ($US/Tonne)

20
80000
120

Investment Cost (IC)- Year 1

Land ( $ L million)
Imported pumping and harvesting
($ US million)
Equipment Scracpt Value (%)
Operating Cost (OC)- Starting from year 2
Imported Chemical fertilizer ($US/ Tonne)
Local Labor forces - persons
Labor Minimum wage rate ($L/month)
Local Electricity price ($L /tonne of ouput)

450
45

Tarriff and subsidies and Others Tax

Export tax on cotton
Imported Tariff for fertilizer (%)
OER ( $ L/$USD)
Financial discount rate (end of year)
Land resale at year 20th increase by %
Scrapt value of equipment

15%
40%
5
3%
30%
10%

10%

Income Tax rate

25%

20
400
600
20

Notes
All output are exported
Assuming no inflation on other inputs/outputs, except land

Table1.1: Project Parameter Table ( in Million and Local Currency)

Project Life (years)
20
Project Output volume (M tonnes)
0.08
0.0006
Output price -World price ($L M/Tonne)
Investment Cost (IC)- Year 1
Land ( $ L million)
Imported pumping and harvesting
($ L million)
Equipment Scracpt Value (%)
Operating Cost (OC)- Starting from year 2
Imported Chemical fertilizer ($L M/ Tonne)
Local Labor forces - persons
Labor Minimum wage rate ($L M/month)
Local Electricity price ($L M/tonne )

450
225

1,000,000
Tarriff and subsidies and Others Tax
Export tax on cotton
Imported Tariff for fertilizer (%)
OER ( $ L/$USD)
Financial discount rate (end of year)
Land resale at year 20th increase by %
Scrapt value of equipment

15%
40%
5
3%
30%
10%

10%

Income Tax rate

25%

0.0001
400
0.0006
0.00002

Notes
All output are exported
Assuming no inflation on other inputs/outputs, except land

Table 2: Finacial Analysis Table (Before Tax in $L Million)

Description/year
1-Project Benefit/Receipt
- Foreign Receipt ($L Million)Export Sales
Total project Receipt (1)

$L 1,000,000

10

11

12

13

14

15

16

17

18

19

20

0.00

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

0.00

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

Sophea Ly (u5123854)
2- Project Expediture
2-1- Local Expenditure
Investment Cost- Land
Operating cost
Labor
Electricity
2-2- Foreign Expenditure
Investment Cost
Imported pumping and harvesting
equipment
Operating cost
- Imported chemicals and fertilisers
Total Project Expenditure (2)
Net Benefit (1)-(2)

Project Net Present Value- $ LM

Page 2 of 12

450.00

-585.00
2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

225.00

675.00
-675.00

2.88
1.60

-22.50

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68 -591.82
25.12 632.62

11.20

30.352034 $ L Million

Table 3: Financial Cash Flow After Tax in $L M

Description/year
Total Project Benefit (Sales + Land Resale)
Total Project Operating Cost (Table 2)
Interest Payment
Depreciation of asset (starting in year 2)
Taxable Income
( Rev - OpExp - Interest- Depre)
Taxation Liability ( 25%)
Net Benefit Before Tax (Table 2)
Net Benefit After Tax

2.88
1.60

$L 1,000,000
1
0.00
0.00
0.00
0.00
0.00

2
40.80
15.68
0.00
10.66
14.46

3
40.80
15.68
0.00
10.66
14.46

4
40.80
15.68
0.00
10.66
14.46

5
40.80
15.68
0.00
10.66
14.46

6
40.80
15.68
0.00
10.66
14.46

7
40.80
15.68
0.00
10.66
14.46

8
40.80
15.68
0.00
10.66
14.46

9
40.80
15.68
0.00
10.66
14.46

10
40.80
15.68
0.00
10.66
14.46

11
40.80
15.68
0.00
10.66
14.46

12
40.80
15.68
0.00
10.66
14.46

13
40.80
15.68
0.00
10.66
14.46

14
40.80
15.68
0.00
10.66
14.46

15
40.80
15.68
0.00
10.66
14.46

16
40.80
15.68
0.00
10.66
14.46

17
40.80
15.68
0.00
10.66
14.46

18
40.80
15.68
0.00
10.66
14.46

19
40.80
15.68
0.00
10.66
14.46

0.00
-675.00
-675.00

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
3.62
25.12 632.62
21.50 629.00

Assume the taxation law in the country is such that there is zero tax liability for a particular year if the project does not have a positive benefit.
Assume also scrap values of assets are not subject to tax.
Land Resale Considered as Scrapt Value and therefore not subject to Tax

20
40.80
15.68
0.00
10.66
14.46

Sophea Ly (u5123854)

Page 3 of 12

Explanation on Excel Spreedsheet

($ LM = $ Local Million)

Q1. See Table 1.1 and 1.2: Parameter Table in Original Form and New Form (in Million )
Note
= Value in USD x OER
- Convert all Value in USD to Local Currency
- Convert all value into Million unit = Original Value / 1,000,000
Q2: See Table 2: Financial Cash Flow Before Tax
Note
= Output price * ( 1 - Export Tax rate) * OER = 120 ( 1-0.15) * 5 = 510 $L/Tonne
- Derive Output Price after Tax
= Output price after Tax x Quantity Produced per Year = 510 $L/Tonne * 0.08 M tonne = 40.80 $L M
- Export Revenue ($L M)
= Imported Price ( 1 + Tarrif rate) * OER = 20 * 5 * (1+0.40) = 140 $L/Tonne
- Derive input price of Chemical fertilizer after Tarrif
= Imported Price after Tarrif x Quanity produced = 140 * 0.08 M tonne= 11.20 $L M
- Cost of purchase of Chemical fertilizer
= # of labor x Wage rate x 12 months = 0.0006 * 400*12= 2.88 $ LM
- Labor Cost per year
= Electricity Price per tonne x Quanitity Production = 20 * 0.08 M tonne = 1.6 $L M
- Non-trade (electricity)
= Investment Cost + Operating Cost
- Total Expenditure
= Land purchase + Equipment purchase = 450 +225 = 675 $ L M
Year 1
= Labor + Electricity + Fertilizer = 2.88+ 1.60+ 11.20 = 15.68 $ L M
Year 2 -19
= (Minus) Land Resales +(minus) Equipment Scrap value + Labor + Electricity + Fertilizer
Year 20

- Total Revenue (from year 2 to year 20)

- Project Net Benefit (Before Tax)

(Minus)Initial Land Price x (1 + 30%) + (minus)( Initial Equipment Price x 10%) + + Labor + Electricity + Fertilizer
=-[ (450 * 130%) + (225 * 10%)] + 2.88+ 1.60+ 11.20 = (Minus) 591.82 $L M
= Revenue from Sales (From year 2 to year 20) = 40.80 LM
= Total Revenue - Total Expediture

Q3: Calculate NPV at 3 %

20

=
=1

( )
(1 + )

Excel Formular : NPV (rate, NB1, NB2,....)

Refer to Table 2: NPV at 3% discount rate = 30.35 $ L Million
Q4- Project Acceptance based on NPV
Based on decision rule that the project should be accepted as long it generate positive profit with NPV >0
Thus, the project with NPV = 30.35 $L Millions should be selected

Sophea Ly (u5123854)

Page 4 of 12

Q5- Financial Cash Flow after Tax, see Table 3

- Total Benefit
- From Year 2 to year 20

= Sales revenue + Asset Sales

only Sales Revenue = 40.8 $ L M
ReSales of Land & Sales of Equipment (Excluded from Calculation because they are considered as scrap value
and therefore not subject to Tax)

- Operating Cost
- Interest payment
- Depreciation
- From Year 2 to year 20
- Taxable Income
- Year I
- From Year 2 to year 20

(From Table 2)

- Taxable Liability
- Year I
- From Year 2 to year 19

= taxable Income x Tax rate

- Net Benifit After Tax

- Year I
- From Year 2 to year 19
-In Year 20

= Net Benefit Before Tax(Table 2) - Taxliability

N/A
= (Price of asset - Scrap Value )/19 = (45-4.5)/19= 2,12 $LM
= Revenue - Operating Cost - Depreciation
No income yet
= 40.80 - 15.68- 10.66 = 14.46 $ LM

No tax
= 14.46 * 25% = 3.62$ LM

- 675 $ L M
= 25.12- 3,62 = 21.50 $ L M
= 632.62- 2.62= 629 $ LM

Sophea Ly (u5123854)

Student Information
Name : Sophea Ly
Graduate Diploma, IDEC 8001

Page 5 of 11

Student ID:
u5123854
Email. Sophea.ly@anu.edu.au

Agriculture Project: Cotton Production

Table1: Project Parameter Table ( Original Form)
Project Life (years)
Project Output volume (tonnes)
Output FOBprice -World price ($US/Tonne)

20
200000
80

Investment Cost (IC)- Year 1

Investment Period (year)
Raw materials pa incl Traff ($ L M)

400
3
8

Labor cost per annual ($ L M)

Overhead cost ($ L M)
Output domestic price ($L)
Raw material CIF price ( $L)
Popultion ( $L/tonne)
In year 4)

4
2
360
7.5
15
7.5

OER ( $ L/$USD)
SER
EEP
Unprotected Labor Cost ($ L M)

Table 2: Finacial Analysis Table (Before Tax in $L Million)

Description/year
2- Project Expediture
Investment Cost
Operating cost
Raw material
Labor
Overhead
Total Project Expenditure (2)
1-Project Benefit/Receipt
Net Benefit (1)-(2)

Project Net Present Value- $ LM

133.33

133.33

133.33

133.33
0.00
-133.33

133.33
0.00
-133.33

Discount rate

5%

Social Discount rate

Output
export Tax
Raw material ($ US)
Import Tarrif

4%
10%
1.51
6%

10

11

12

13

14

15

16

17

18

19

20

8.00
4.00
2.00

8.00
4.00
2.00

8.00
4.00
2.00

8.00
4.00
2.00

8.00
4.00
2.00

8.00
4.00
2.00

8.00
4.00
2.00

8.00
4.00
2.00

8.00
4.00
2.00

8.00
4.00
2.00

8.00
4.00
2.00

8.00
4.00
2.00

8.00
4.00
2.00

8.00
4.00
2.00

8.00
4.00
2.00

8.00
4.00
2.00

8.00
4.00
2.00

14.00
36.00
22.00

14.00
72.00
58.00

14.00
72.00
58.00

14.00
72.00
58.00

14.00
72.00
58.00

14.00
72.00
58.00

14.00
72.00
58.00

14.00
72.00
58.00

14.00
72.00
58.00

14.00
72.00
58.00

14.00
72.00
58.00

14.00
72.00
58.00

14.00
72.00
58.00

14.00
72.00
58.00

14.00
72.00
58.00

14.00
72.00
58.00

14.00
72.00
58.00

172.151865 $ L Million

Table 2: Finacial Analysis Table (Before Tax in $L Million)

Description/year
2- Project Expediture
Investment Cost
Operating cost
Raw material
Labor
Overhead

10%
2

$L 1,000,000

133.33
0.00
-133.33

5
5.5

$L 1,000,000

133.33

133.33

133.33

10

11

12

13

14

15

16

17

18

19

20

8.30
2.00
2.00

8.30
2.00
2.00

8.30
2.00
2.00

8.30
2.00
2.00

8.30
2.00
2.00

8.30
2.00
2.00

8.30
2.00
2.00

8.30
2.00
2.00

8.30
2.00
2.00

8.30
2.00
2.00

8.30
2.00
2.00

8.30
2.00
2.00

8.30
2.00
2.00

8.30
2.00
2.00

8.30
2.00
2.00

8.30
2.00
2.00

8.30
2.00
2.00

Sophea Ly (u5123854)
Pullution
Total Project Expenditure (2)
1-Project Benefit/Receipt
Net Benefit (1)-(2)

Page 6 of 11

133.33
0.00
-133.33

Project Net Present Value- $ LM

133.33
0.00
-133.33

133.33
0.00
-133.33

0.75
13.05
44.00
30.95

380.576645 $ L Million

Turtoria;7
Question 3: The project gas o operating cost, output: 100 unit per year , interst 10%
1) First scenario could occur at Prob 0.7, price $1 per unit
Year
Investment cost
Benefit
NB
NPV

0
280
0
-280

1
0
100
100

2
0
100
100

3
0
100
100

1
0
300
300

2
0
300
300

3
0
300
300

-$31.31

1) Second scenario could occur at Prob 0.3, price $3 per unit

Year
Investment cost
Benefit
NB
NPV

0
330
0
-330
$416.06

Expeted Value of NPV

NPV
Probability

0.7
0.3

Pro* NPV
-$31.31
$416.06

-$21.92
$124.82
$102.90

The project should be accepted

1.0714286

3.00
15.30
88.00
72.70

3.00
15.30
88.00
72.70

3.00
15.30
88.00
72.70

3.00
15.30
88.00
72.70

3.00
15.30
88.00
72.70

3.00
15.30
88.00
72.70

3.00
15.30
88.00
72.70

3.00
15.30
88.00
72.70

3.00
15.30
88.00
72.70

3.00
15.30
88.00
72.70

3.00
15.30
88.00
72.70

3.00
15.30
88.00
72.70

3.00
15.30
88.00
72.70

3.00
15.30
88.00
72.70

3.00
15.30
88.00
72.70

3.00
15.30
88.00
72.70

Sophea Ly (u5123854)

Student Information
Name : Sophea Ly
Graduate Diploma, IDEC 8001

Page 7 of 11

Student ID:
u5123854
Email. Sophea.ly@anu.edu.au

Agriculture Project: Cotton Production

Table1: Project Parameter Table ( Original Form)
Project Life (years)
Project Output volume (tonnes)
Output price -World price ($US/Tonne)
Investment Cost (IC)- Year 1
Land ( $ L million)- CIF
Imported pumping and harvesting
($ US million)
Equipment Scracpt Value (%)
Operating Cost (OC)- Starting from year 2
Imported Chemical fertilizer ($US/ Tonne)
Local Labor forces - persons
Labor Minimum wage rate ($L/month)
Unprotected Labor Minimum wage rate ($L/month)
the border price equivalent of this electricity
Local Electricity price ($L /tonne of ouput)

20
80000
120

450
45
10%
20
400
600
350
14
20

Table1.1: Project Parameter Table ( in Million and Local Currency)

Project Life (years)
20
Project Output volume (M tonnes)
0.08
0.0006
Output price -World price ($L M/Tonne)
Investment Cost (IC)- Year 1
Land ( $ L million)
Imported pumping and harvesting
($ L million)
Equipment Scracpt Value (%)
Operating Cost (OC)- Starting from year 2
Imported Chemical fertilizer ($L M/ Tonne)
Local Labor forces - persons
Labor Minimum wage rate ($L M/month)
Unprotected Labor Minimum wage rate ($L/month)
the border price equivalent of this electricity
Local Electricity price ($L M/tonne )

Table 2: Finacial Analysis Table (Before Tax in $L Million)

Tarriff and subsidies and Others Tax

Export tax on cotton
Imported Tariff for fertilizer (%)
OER ( $ L/$USD)
Financial discount rate (end of year)
Land resale at year 20th increase by %
Scrapt value of equipment
Income Tax rate
Foreign Exchange Premium
Notes
All output are exported
Assuming no inflation on other inputs/outputs, except land

15%
40%
5
3%
30%
10%
25%
15%

450
225

1,000,000
Tarriff and subsidies and Others Tax
Export tax on cotton
Imported Tariff for fertilizer (%)
OER ( $ L/$USD)
Financial discount rate (end of year)
Land resale at year 20th increase by %
Scrapt value of equipment

15%
40%
5
3%
30%
10%

10%

Income Tax rate

25%

0.0001
400
0.0006
0.00035
0.000014
0.00002

Notes
All output are exported
Assuming no inflation on other inputs/outputs, except land

$L 1,000,000

Sophea Ly (u5123854)
Description/year
1-Project Benefit/Receipt
- Foreign Receipt ($L Million)Export Sales
Total project Receipt (1)
2- Project Expediture
2-1- Local Expenditure
Investment Cost- Land
Operating cost
Labor
Electricity
2-2- Foreign Expenditure
Investment Cost
Imported pumping and harvesting
equipment
Operating cost
- Imported chemicals and fertilisers
Total Project Expenditure (2)
Net Benefit (1)-(2)

Project Net Present Value- $ LM

Page 8 of 11
1

10

11

12

13

14

15

16

17

18

19

20

0.00

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

0.00

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

40.80

450.00

-585.00
2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

2.88
1.60

225.00

675.00
-675.00

2.88
1.60

-22.50

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

11.20

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68
25.12

15.68 -591.82
25.12 632.62

11.20

30.352034 $ L Million

Table 3: Financial Cash Flow After Tax in $L M

Description/year
Total Project Benefit (Sales + Land Resale)
Total Project Operating Cost (Table 2)
Interest Payment
Depreciation of asset (starting in year 2)
Taxable Income
( Rev - OpExp - Interest- Depre)
Taxation Liability ( 25%)
Net Benefit Before Tax (Table 2)
Net Benefit After Tax

2.88
1.60

$L 1,000,000
1
0.00
0.00
0.00
0.00
0.00

2
40.80
15.68
0.00
10.66
14.46

3
40.80
15.68
0.00
10.66
14.46

4
40.80
15.68
0.00
10.66
14.46

5
40.80
15.68
0.00
10.66
14.46

6
40.80
15.68
0.00
10.66
14.46

7
40.80
15.68
0.00
10.66
14.46

8
40.80
15.68
0.00
10.66
14.46

9
40.80
15.68
0.00
10.66
14.46

10
40.80
15.68
0.00
10.66
14.46

11
40.80
15.68
0.00
10.66
14.46

12
40.80
15.68
0.00
10.66
14.46

13
40.80
15.68
0.00
10.66
14.46

14
40.80
15.68
0.00
10.66
14.46

15
40.80
15.68
0.00
10.66
14.46

16
40.80
15.68
0.00
10.66
14.46

17
40.80
15.68
0.00
10.66
14.46

18
40.80
15.68
0.00
10.66
14.46

19
40.80
15.68
0.00
10.66
14.46

0.00
-675.00
-675.00

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
25.12
21.50

3.62
3.62
25.12 632.62
21.50 629.00

Assume the taxation law in the country is such that there is zero tax liability for a particular year if the project does not have a positive benefit.
Assume also scrap values of assets are not subject to tax.
Land Resale Considered as Scrapt Value and therefore not subject to Tax

20
40.80
15.68
0.00
10.66
14.46

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Explanation on Excel Spreedsheet

($ LM = $ Local Million)

Q1. See Table 1.1 and 1.2: Parameter Table in Original Form and New Form (in Million )
Note
= Value in USD x OER
- Convert all Value in USD to Local Currency
- Convert all value into Million unit = Original Value / 1,000,000
Q2: See Table 2: Financial Cash Flow Before Tax
Note
= Output price * ( 1 - Export Tax rate) * OER = 120 ( 1-0.15) * 5 = 510 $L/Tonne
- Derive Output Price after Tax
= Output price after Tax x Quantity Produced per Year = 510 $L/Tonne * 0.08 M tonne = 40.80 $L M
- Export Revenue ($L M)
= Imported Price ( 1 + Tarrif rate) * OER = 20 * 5 * (1+0.40) = 140 $L/Tonne
- Derive input price of Chemical fertilizer after Tarrif
= Imported Price after Tarrif x Quanity produced = 140 * 0.08 M tonne= 11.20 $L M
- Cost of purchase of Chemical fertilizer
= # of labor x Wage rate x 12 months = 0.0006 * 400*12= 2.88 $ LM
- Labor Cost per year
= Electricity Price per tonne x Quanitity Production = 20 * 0.08 M tonne = 1.6 $L M
- Non-trade (electricity)
= Investment Cost + Operating Cost
- Total Expenditure
= Land purchase + Equipment purchase = 450 +225 = 675 $ L M
Year 1
= Labor + Electricity + Fertilizer = 2.88+ 1.60+ 11.20 = 15.68 $ L M
Year 2 -19
= (Minus) Land Resales +(minus) Equipment Scrap value + Labor + Electricity + Fertilizer
Year 20

- Total Revenue (from year 2 to year 20)

- Project Net Benefit (Before Tax)

(Minus)Initial Land Price x (1 + 30%) + (minus)( Initial Equipment Price x 10%) + + Labor + Electricity + Fertilizer
=-[ (450 * 130%) + (225 * 10%)] + 2.88+ 1.60+ 11.20 = (Minus) 591.82 $L M
= Revenue from Sales (From year 2 to year 20) = 40.80 LM
= Total Revenue - Total Expediture

Q3: Calculate NPV at 3 %

20

=
=1

( )
(1 + )

Excel Formular : NPV (rate, NB1, NB2,....)

Refer to Table 2: NPV at 3% discount rate = 30.35 $ L Million
Q4- Project Acceptance based on NPV
Based on decision rule that the project should be accepted as long it generate positive profit with NPV >0
Thus, the project with NPV = 30.35 $L Millions should be selected

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Page 10 of 11

Q5- Financial Cash Flow after Tax, see Table 3

- Total Benefit
- From Year 2 to year 20

= Sales revenue + Asset Sales

only Sales Revenue = 40.8 $ L M
ReSales of Land & Sales of Equipment (Excluded from Calculation because they are considered as scrap value
and therefore not subject to Tax)

- Operating Cost
- Interest payment
- Depreciation
- From Year 2 to year 20
- Taxable Income
- Year I
- From Year 2 to year 20

(From Table 2)

- Taxable Liability
- Year I
- From Year 2 to year 19

= taxable Income x Tax rate

- Net Benifit After Tax

- Year I
- From Year 2 to year 19
-In Year 20

= Net Benefit Before Tax(Table 2) - Taxliability

N/A
= (Price of asset - Scrap Value )/19 = (45-4.5)/19= 2,12 $LM
= Revenue - Operating Cost - Depreciation
No income yet
= 40.80 - 15.68- 10.66 = 14.46 $ LM

No tax
= 14.46 * 25% = 3.62$ LM

- 675 $ L M
= 25.12- 3,62 = 21.50 $ L M
= 632.62- 2.62= 629 $ LM