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  • NPV of A Borders - AP

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    pillai21
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    The document is a spreadsheet showing the estimated financial impact of a new marketing model on Borders bookstores over several years. It projects that the new model would increase the number of loyalty program customers from 40 to 70 million over 6 years, and increase average revenue per customer from $38 to $80. Revenue is projected to grow 10% per year from $1.5 billion currently to over $5.6 billion in year 6. The new model is also projected to improve gross profit margins and reduce operating expenses and interest expenses, turning the current annual net loss of $189 million to a net profit of over $665 million in year 6. The net present value of the new model for Borders is calculated to be over $

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    NPV of a Borders_AP

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    The document is a spreadsheet showing the estimated financial impact of a new marketing model on Borders bookstores over several years. It projects that the new model would increase the number of loyalty program customers from 40 to 70 million over 6 years, and increase average revenue per customer from $38 to $80. Revenue is projected to grow 10% per year from $1.5 billion currently to over $5.6 billion in year 6. The new model is also projected to improve gross profit margins and reduce operating expenses and interest expenses, turning the current annual net loss of $189 million to a net profit of over $665 million in year 6. The net present value of the new model for Borders is calculated to be over $

    Droits d'auteur :

    Attribution Non-Commercial (BY-NC)
    Téléchargez comme XLS, PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    21 vues1 page

    NPV of A Borders - AP

    Transféré par

    pillai21
    The document is a spreadsheet showing the estimated financial impact of a new marketing model on Borders bookstores over several years. It projects that the new model would increase the number of loyalty program customers from 40 to 70 million over 6 years, and increase average revenue per customer from $38 to $80. Revenue is projected to grow 10% per year from $1.5 billion currently to over $5.6 billion in year 6. The new model is also projected to improve gross profit margins and reduce operating expenses and interest expenses, turning the current annual net loss of $189 million to a net profit of over $665 million in year 6. The net present value of the new model for Borders is calculated to be over $

    Droits d'auteur :

    Attribution Non-Commercial (BY-NC)
    Téléchargez comme XLS, PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    sur 1

    Borders: Brand Lifetime Value Spreadsheet (all values are 12 months)

    Current Scenario (39


    Estimates Under New Year 2 Year 3 Year 4 Year 5 Year 6
    weeks ended Model
    10/30/10)
    Customers (Borders Reward Program) 40,000,000 44,000,000 48,400,000 53,240,000 58,564,000 64,420,400 70,862,440 Number of Customers that signed for Borders Reward Program
    Average Marketing expense per customer 10.48 10.79 11.12 11.45 11.80 12.15 12.51
    Interest Expense 3.01% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
    Customer Growth Rate 10.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% % of consumers that buy from Borders increase every year
    Rate of Revenue Growth -15.03% 10% 10.0% 10.0% 10.0% 10.0% 10.0% Driven by launch of higher value products and increase in market share
    Avg. Items Bought Per Trip 1.0 1.0 1.0 1.0 1.0 1.0 1.0
    Avg. Times Bought Per Year 3.8 5 5.0 5.0 5.0 5.0 5.0
    Gross Margin 18.15% 22.60% 22.6% 22.6% 22.6% 22.6% 22.6% Goes up/down with raw material, labor, transit costs, product mix
    Operating Cost Increases 3% 3% 3.0% 3.0% 3.0% 3.0% 3.0% Goes up/down based on your firm's ability to negotiate lower media rates
    Discount Factor 8% 8% Goes up/down) based on benchmark performance (S&P, DJIA, USTreasury Bonds)

    Total Brand or Product Current With New Model Year 2 Year 3 Year 4 Year 5 Year 6
    Avg. Dollars Spent Per Item $9.98 $10.98 $11.98 $12.98 $13.98 $14.98 $15.98 Revenue / Number of unique customers / Items per trip/ Times bought per year
    Revenue $ 1,516,960,000 $ 2,415,600,000 $ 2,899,160,000 $ 3,455,276,000 $ 4,093,623,600 $ 4,825,087,960 $ 5,661,908,956 Your Brand's latest actual revenue or forecast
    Gross Profit $ 275,328,240 $ 545,925,600 $ 655,210,160 $ 780,892,376 $ 925,158,934 $ 1,090,469,879 $ 1,279,591,424
    Operating Expense $ 419,200,000 $ 431,776,000 $ 444,729,280 $ 458,071,158 $ 471,813,293 $ 485,967,692 $ 500,546,723 Your Brand's fair share of SG&A and Ad costs to reach existing consumers
    Interest Expense $ 45,660,496 $ 48,312,000 $ 57,983,200 $ 69,105,520 $ 81,872,472 $ 96,501,759 $ 113,238,179 Cost of short and long term debt after coming out of bankruptcy
    Net Profit $ (189,532,256) $ 65,837,600 $ 152,497,680 $ 253,715,698 $ 371,473,168 $ 508,000,428 $ 665,806,522

    Net Present Value (NPV) $1,149,935,035 $2,017,331,096

    Per Customer Current With New Model Year 2 Year 3 Year 4 Year 5 Year 6
    Revenue $ 38 $ 55 $ 60 $ 65 $ 70 $ 75 $ 80
    Gross Profit $ 7 $ 12 $ 14 $ 15 $ 16 $ 17 $ 18
    Operating Expense $ 10 $ 10 $ 9 $ 9 $ 8 $ 8 $ 7
    Interest Expense $1.14 $1.10 $1.20 $1.30 $1.40 $1.50 $1.60
    Net Profit $ (5) $ 1 $ 3 $ 5 $ 6 $ 8 $ 9

    Net Present Value (NPV) $18 $33

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