Example

The yearly net before tax income (IBT) of a project is shown in the second column of the following table. Tax is assumed to be 30% of the IBT. Calculate the before- and after-tax NPW of the project. Table 8.1 shows the resultant income after tax (IAT).

Table 8.1

2 - 30,000 - 10,000 - 30,000 - (- 10,000) = -20,000

Before-tax cash flow:

NPW m 100,000 (P/F, 1(1,1) - 30,000 (P/F, 10,2)+ 200,000 (P/F, 10,3) = 2l6,3?S Cash flow after tax:

NPW - 70,000 (P/F, 10,1) - -20,000 (P/F, IQ,2) + 140,000 (P/F, 10,3) = 152,291

In a similar manner, an after-tax NFW, ROR, and EUAW can be calculated. We could also use the spreadsheet and obtain the same result.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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