0 1 2 3 4

Calculation of Taxable income

Savings 44,000 44,000 44,000 44,000
Increased revenue 0 0 0 0
Less: Depreciation (new thing) -25000 -25000 -25000 -25000
Plus: Depreciation (old thing) 5,000 5,000 5,000 5,000
Loss on sale of old thing -14,000
Loss on sale of new thing -7,000
Taxable income -14,000 24,000 24,000 24,000 17,000

Cash flows
Tax to be paid 4200 -7200 -7200 -7200 -5100
Salvage value - old thing 6,000
Salvage value - new thing 93,000
Savings 44,000 44,000 44,000 44,000
Increased revenue 0 0 0 0
Purchase cost of new hoist -200,000
Total cash flows -189800 36800 36800 36800 131900

Net present value @ 7% -189800 34392.52 32142.55 30039.76 100625.9

Total NPV 7400.7089