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List the fictional supplied amounts
Equipment costs 500 now and additional operating working capital costs 100 now. Operating after-tax cash receipts are 300 at each of the next two year ends. At time two, the example assumes a full working-capital release of 100 and supplied after-tax disposal proceeds of 80.
Assemble the schedule
| Period | Equipment | Working capital | Operations | Disposal | Net |
|---|---|---|---|---|---|
| 0 | −500 | −100 | 0 | 0 | −600 |
| 1 | 0 | 0 | 300 | 0 | 300 |
| 2 | 0 | +100 | 300 | 80 | 480 |
Calculate at the stated annual rate
At 10% per annual interval, NPV = −600 + 300/1.1 + 480/1.1² = 69.421488. The 480 terminal flow includes three amounts at the same modeled date.
Keep recovery and tax assumptions from becoming guarantees
The disposal amount is supplied as after tax; no separate tax-law calculation is asserted. The full working-capital release is a case assumption, not a universal outcome. Changing those assumptions requires changing the corresponding dated amounts.