find cash inflow from earning after tax if if machine a 1st year 40000, 2nd year 120000, 3rd year 160000,4th year 240000, 5th year 160000. where cash costing is 400000 and requiring 30,000 as additional working capital at the end of 1st year. the company has targeted return capital 10% in NNPV method.

To find the cash inflow from earnings after tax using the NPV (Net Present Value) method, let's follow these steps:

1. **Initial Cash Outflow**:
   - The machine cost is \(400,000\).
   - Additional working capital at the end of the 1st year is \(30,000\).
   - Total initial cash outflow: \(400,000 + 30,000 = 430,000\).

2. **Cash Inflows for each year**:
   - Year 1: \(40,000\)
   - Year 2: \(120,000\)
   - Year 3: \(160,000\)
   - Year 4: \(240,000\)
   - Year 5: \(160,000\)

3. **Discount Factor**:
   - The targeted return on capital is \(10\%\). We use this to discount the cash inflows.

4. **Calculate Present Value (PV) of Cash Inflows**:
   - The formula to calculate the present value of cash inflows for each year is:
     \[
     PV = \frac{\text{Cash Inflow}}{(1 + r)^n}
     \]
   - Where:
     - \(r = 0.10\) (discount rate)
     - \(n = \text{year number}\)

Let's calculate the NPV by finding the present value of each cash inflow and then subtracting the initial cash outflow:

\[
\text{NPV} = \sum_{n=1}^{5} \frac{\text{Cash Inflow}_n}{(1 + 0.10)^n} - 430,000
\]

I'll calculate the NPV step by step:The NPV (Net Present Value) of the investment is approximately \(89,018.20\).

Here's the breakdown of the present values (PVs) of cash inflows for each year:

- Year 1: \(36,363.64\)
- Year 2: \(99,173.55\)
- Year 3: \(120,210.37\)
- Year 4: \(163,923.23\)
- Year 5: \(99,347.41\)

The total initial cash outflow was \(430,000\), and the sum of these present values minus this outflow gives us the NPV of \(89,018.20\). Since the NPV is positive, this indicates that the investment is expected to generate a return higher than the targeted return rate of 10%.

Would you like more details or have any questions?

### Related Questions:
1. How would the NPV change if the discount rate were 12% instead of 10%?
2. What is the payback period for this investment?
3. How would additional expenses, like maintenance costs, affect the NPV calculation?
4. What would be the impact on NPV if the additional working capital of \(30,000\) was recovered at the end of year 5?
5. How to calculate the Internal Rate of Return (IRR) for this investment?

**Tip:** A positive NPV means the investment is worthwhile, as it adds value to the company by exceeding the expected return rate.

Find cash inflow from earnings after tax if machine A generates 40,000 in the 1st year, 120,000 in the 2nd year, 160,000 in the 3rd year, 240,000 in the 4th year, and 160,000 in the 5th year. The machine costs 400,000 and requires 30,000 as additional working capital at the end of the 1st year. The company has a targeted return on capital of 10% using the NPV method.

Learn how to calculate the Net Present Value (NPV) for a machine investment with cash inflows of 40,000, 120,000, 160,000, 240,000, and 160,000 over 5 years. Understand the impact of a 10% discount rate and additional working capital. Suitable for finance students and professionals.

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