Lakehead Marine Corp. proposes a boat lift: investment 900,000 at t = 0; additional working capital of 40,000 required at t = 0 and recovered at the end of year 5; five-year life; straight-line depreciation 180,000 a year; accounting income after depreciation 90,000 a year; salvage 50,000 at the end of year 5. Ignore tax. Build the net cash-flow schedule (outflows negative).
Lakehead Marine Corp. proposes a boat lift: investment 900,000 at t = 0; additional working capital of 40,000 required at t = 0 and recovered at the end of year 5; five-year life; straight-line depreciation 180,000 a year; accounting income after depreciation 90,000 a year; salvage 50,000 at the end of year 5. Ignore tax. Build the net cash-flow schedule (outflows negative).
Answer
Net cash flow at year 0 → -940000 · Annual net cash inflow, years 1–4 → 270000 · Net cash flow in year 5 → 360000
Cells - Net cash flow at year 0 · ±0 - Annual net cash inflow, years 1–4 · ±0 - Net cash flow in year 5 · ±0 t0: −900,000 investment − 40,000 working capital = −940,000. Years 1–4: income 90,000 + depreciation 180,000 = 270,000 (depreciation never left the bank). Year 5: 270,000 + 50,000 salvage + 40,000 working capital recovered = 360,000. Excel: =C2+D2 for each year once income and depreciation are in separate columns.
Hermanson Vol 2 ch 26; OpenStax Accounting v2 §11.1; Heisinger & Hoyle §8.6