Present value of $1 table is used to find the present value of a single cash flow (payment or receipt) that is expected to occur in future.
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Investment will commerce at the start of 2014 and you must assume that the lost revenues and cost savings will accrue at the end of each year. The current tax rate is estimated at 40% which rate needs to be used to calculate the tax shield due to the depreciation of the project over 5 years. The project will be fully financed from equity and the required rate of return by shareholders for this particular project is set at 16%.
Perform the necessary calculations using the Net Present Value method to assess whether energy saving and carbon reduction project is feasible.
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