Inflation question: Would salvage value and process methodology be affected by inflation?
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Given:
Yr 1 Yr 2 Yr3 Yr4 Yr5
Revenues 1,030,000 1,060,000 1,290,000 1,330,000 1,370,000
Inflation already included
Calculate net C/F if there is 3% annual inflation
Lose of income from not leasing land of $80,000 per yr.
Decrease of $45,000 per year in revenues from another product line
Depreciation is 322,000 per year
Operating costs are 70% of revenue
Tax is 40%
Use 225,000 as terminal c/f
****Would salvage value and process methodology be affected by inflation???
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