WORLDWIDE PAPER COMPANY

Woodyard Investment Analysis ($000)

Sales Revenue
NWC (ten percent of sales) Change in NWC (cash flow)

Investment:
Capital Outlay
Net Working Capital (10% Sales)
Total Investment
Investment Recovery :
Equipment Salvage
Net Working Capital (full recovery)

ANNUAL NET WORKING CAPITAL

2007
2008
2009
2010
0
4,000 10,000
10,000
400
1000
1000
400
600
0

2013
10,000
1000
0

2008

2009

2010

2011

2012

2013

16000
0
16000

2000
400
2400

0
600
600

0
0
0

0
0
0

0
0
0

0
0
0
(1080)
(1000)

1
0

EBIT
- Taxes (40%)
NOPAT
+ Depreciation
- Investment
= Free Cash Flow

2012
10,000
1000
0

2007

Earnings before Interest and Taxes (EBIT):

Sales Revenue
Cost of Good Sold (75% Sales)
SG&A (5% Sales)
Operating Savings
Depreciation ($18,000/6)
Total Costs & Expenses

2011
10,000
1000
0

(16000)
(16000)

4000

10000

10000

10000

10000

10000

(3000)
(200)
2000
(3000)
(4200)

(7500)
(500)
3500
(3000)
(7500)

(7500)
(500)
3500
(3000)
(7500)

(7500)
(500)
3500
(3000)
(7500)

(7500)
(500)
3500
(3000)
(7500)

(7500)
(500)
3500
(3000)
(7500)

(200)
(80)
(120)
3000
(2400)
480

2500
(1000)
1500
3000
(600)
3900

2500
(1000)
1500
3000
0
4500

2500
(1000)
1500
3000
0
4500

2500
(1000)
1500
3000
0
4500

2500
(1000)
1500
3000
(2080)
6580

WACC = Cost of Debt X debt %(1-Tax)+Cost of Equity X Equity %

WACC using moderate risk level
WACC using lower risk level
WACC using higher risk level

9.66
9.44
9.92

NPV using moderate risk level

NPV using lower risk level
NPV using higher risk level

811.89
984.92
676.69

IRR

11.00%

16029.80