Time 0 1 2 3

Sales Units 200 250 390

Sales Revenue 3400000 4250000 6630000
Variable Costs (2600000) (3250000) (5070000)
Contribution 800000 1000000 1560000
Fixed cost cash flows (130000) (130000) (130000)
Wear and Tear (600000) (600000) 0
Net Profit before Tax 70000 270000 1430000
Taxation (21000) (81000) (429000)
Net Profit 49000 189000 1001000

(+) Non Cash Flow W&T 600000 600000 0

Cash Flows from Operations 649000 789000 1001000

Working Capital -70000 70000

Machine -1200000 56000
Cash Flows -1270000 649000 789000 1127000
Present Value -1270000 564347.83 596597.35 741020.79
Net Present Value 631965.97
IRR 40.38%

Doug's Solution.xls 1
 Calculation Detail

17000XNum of Units 17000 Interest Rate 1.15

(6000+5000+2000)XNum of Units 13000

1200000X0.5

Net Profit before TaxX0.3

80000X(1-0.3)

Doug's Solution.xls 2