Académique Documents
Professionnel Documents
Culture Documents
Income Statements
For the Years 2010 and 2011
2011
Sales
Cost of Goods Sold
Gross Profit
Depreciation Expense
Selling & Admin Expense
Net Operating Income
Interest Expense
Earnings Before Taxes
Taxes
Net Income
Notes:
Tax Rate
Shares Outstanding
Dividends per Share
Cash Dividends
2010
186.946
102.819
150.000
82.500
84.127
67.500
3.530
0.550
3.098
0.480
80.047
63.923
0.680
79.367
0.540
63.383
29.366
50.001
22.184
41.199
37%
35%
5000
6
5000
6
30000
2010
Cash
Accounts receivable
Inventories
Total Current Assets
Gross fixed assets
Accumulated depreciation
Net Fixed Assets
Total assets
10.150
12.504
8.607
31.261
29.020
7.230
21.790
53.051
7.500
11.000
7.550
26.050
8.850
3.700
5.150
31.200
Accounts payable
Notes payable
Total Current Liabilities
Long-term debt
Total Liabilities
Common stock
Additional paid in capital
Retained earnings
Total Equity
Total Liabilities & Equity
8.201
2.000
10.201
7.115
17.316
5.000
0.500
30.235
35.735
53.051
6.851
3.000
9.851
5.615
15.466
5.000
0.500
10.234
15.734
31.200
Changes
1504
1057
20170
1350
-1000
1500
1850
0
0
Totals
50.001
3.530
-1.504
-1.057
1.350
52.320
-20.170
-1.000
1.500
0.000
0.000
-30.000
-20.170
-29.500
2.650
7.500
10.150
2.650
Cost of Capital
Year
0
1
2
3
4
5
NPV
IRR
PI
MIRR
12%
Project A
$ (50,000.00)
$
20,000.00
$
25,000.00
$
30,000.00
$
35,000.00
$
40,000.00
$
Cross
Project B
$ (50,000.00)
$
35,000.00
$
30,000.00
$
25,000.00
$
20,000.00
$
15,000.00
54,080.60 $
44.65%
2.08
29.69%
Project C
$ (20,000.00)
$
30,000.00
$
30,000.00
$ (40,000.00)
44,182.09 $
50.00%
1.88
27.12%
2,230.32
0.00%
1.05
13.69%
68.61%
0
1
2
3
29.32%
PV
NPV (cross)
17,866.40 $
17,866.40
Because the projects are mutually exclusive, Project A should be accepted since NPV is QUEEN (aka largest NPV).
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
24%
26%
28%
30%
32%
34%
NPV (A)
NPV (B)
NPV (C )
$
54,080.60 $
44,182.09 $
2,230.32
100000
75000
0
90470.55501
68769.71796
553.9347611
81809.79627
63040.43193
1022.98589
73920.01915
57759.98906
1417.008672
66716.32899
52882.72305
1744.652746
60124.74309
48368.52922
2013.523666
54080.6042
44182.08693
2230.3207
48527.24963
40292.20366
2400.95468
43414.89109
36671.25986
2530.649063
38699.66875
33294.73741
2624.026799
34342.84979
30140.8179
2685.185185
30310.14749
27190.0394
2717.760517
26571.14072
24425.00216
2724.984056
23098.77796
21830.11574
2709.730571
19868.95204
19391.381
2674.560547
16860.13472
17096.20165
2621.756941
14053.06189
14933.22106
2553.357264
11430.46157
12892.18037
2471.181628
120000
100000
80000
Rate
60000
40000
20000
20000
2376.857317
2271.840345
2157.434402
2034.807536
1905.006859
1768.971536
1627.544272
1481.481481
-20000
4%
10963.79501
9139.646919
7412.090201
5774.168453
4219.542096
2742.424391
1337.524984
0
2%
8976.818396
6678.169243
4521.925388
2496.717475
592.260043
-1200.767093
-2890.822916
-4485.596708
0%
36%
38%
40%
42%
44%
46%
48%
50%
Inflows
0
30000
30000
0
Outflows
20000
0
0
40000
$ 50,701.53 $ 48,471.21
Project A
Project B
Project C
50%
48%
46%
44%
42%
40%
38%
36%
34%
32%
30%
28%
26%
24%
22%
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
land
equip
Dep Base
MACRS
Years
salv
sales
growth
var cost
FC
tax
cost of capital
250000
400000
650000
20
5
550000
500000
8%
60%
80000
35%
10%
0
Revenues
Less: COGS
Less: FC
Less: Dep
EBT
Less: Taxes
NI
Plus: Dep
OCF
Equip
Change in NWC
Cash Flows
NPV
IRR
(650,000.00)
(650,000.00)
94,613.78
13.96%
1
2
500,000.00 540,000.00
300,000.00 324,000.00
80,000.00
80,000.00
24,375.00
46,923.50
95,625.00
89,076.50
33,468.75
31,176.78
62,156.25
57,899.73
24,375.00
46,923.50
86,531.25 104,823.23
86,531.25
104,823.23
3
583,200.00
349,920.00
80,000.00
43,400.50
109,879.50
38,457.83
71,421.68
43,400.50
114,822.18
4
629,856.00
377,913.60
80,000.00
40,150.50
131,791.90
46,127.17
85,664.74
40,150.50
125,815.24
114,822.18
125,815.24
The Freshly Frozen Fish Company currently makes frozen fish fillets and other related products
ideas, management of the company decided to look into the possibility of a line of frozen catfi
business would require the purchase of an existing 80-acre catfish farm in western Alabama at
land and $400,000 for the buildings and equipment. The buildings and equipment will be depr
class life of 20 years. At the the end of the five years, management anticipates that the farm w
($350,000 for the land and $200,000 for the buildings and equipment).
The marketing department estimates that the firm will be able to sell 200,000 pounds of fillets
of $2.5 per pound during the first year. Unit demand is expected to grow at a rate of 8% annua
operating expenses are expected to average 60% of gross sales. And fixed costs will be $80,00
marginal tax rate is 35% and its WACC is 10%
5
680,244.48
408,146.69
80,000.00
37,134.50
154,963.29
54,237.15
100,726.14
37,134.50
137,860.64
517,805.60
655,666.24
Year
3-year
5-year
7-year
33.33%
20.00%
14.29%
44.45
32
24.49
14.81
19.2
17.49
7.41
11.52
12.49
11.52
8.93
5.76
8.92
8.93
4.46
9
10
11
12
13
14
15
16
17
18
19
20
21
10-year
15-year
20-year
10.00%
5.00%
3.75%
18
9.5
7.22%
14.4
8.55
6.68%
11.52
7.7
6.18%
9.22
6.93
5.71%
7.37
6.23
5.29%
6.55
5.9
4.89%
6.55
5.9
4.522
6.56
5.91
4.462
6.55
5.9
4.461
3.28
5.91
4.462
5.9
4.461
5.91
4.462
5.9
4.461
5.91
4.462
2.95
4.461
4.462
4.461
4.462
4.461
2.231
equip
ship & inst
dep base
S/L
salv val
ann dep
market val
change in NWC
units
growth
unit pr
var cost
FC
tax
2700
400
3100
5
600
500
800
350
2000
6%
4
50%
1500
30%
0
Revenues
Less: COGS
Less: FC
Less: Dep
EBT
Less: Taxes
NI
Plus: Dep
OCF
Equip
Change NWC
Cash Flows
NPV
IRR
(3,100.00)
(350.00)
(3,450.00)
8%
1
8,000.00
4,000.00
1,500.00
500.00
2,000.00
600.00
1,400.00
500.00
1,900.00
2
8,480.00
4,240.00
1,500.00
500.00
2,240.00
672.00
1,568.00
500.00
2,068.00
3
8,988.80
4,494.40
1,500.00
500.00
2,494.40
748.32
1,746.08
500.00
2,246.08
4
9,528.13
4,764.06
1,500.00
500.00
2,764.06
829.22
1,934.84
500.00
2,434.84
1,900.00
2,068.00
2,246.08
2,434.84
5
10,099.82
5,049.91
1,500.00
500.00
3,049.91
914.97
2,134.94
500.00
2,634.94
740.00
350.00
3,724.94
2.5%
6,518.05
6,367.73
6,220.87
6,077.34
5,937.06
5,799.94
5,665.88
5,534.79
3.0%
6,644.40
6,491.70
6,342.49
6,196.69
6,054.19
5,914.90
5,778.73
5,645.58
3.5%
6,771.98
6,616.86
6,465.30
6,317.20
6,172.45
6,030.97
5,892.66
5,757.43
4.0%
6,900.80
6,743.23
6,589.29
6,438.86
6,291.85
6,148.16
6,007.68
5,870.35
4.5%
7,030.86
6,870.82
6,714.47
6,561.69
6,412.38
6,266.45
6,123.80
5,984.33
6,190.06
56.44%
6,190.06
4%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
2%
6,392.91
6,244.96
6,100.40
5,959.13
5,821.05
5,686.06
5,554.09
5,425.05
8.0%
8.5%
9.0%
9.5%
10.0%
10.5%
11.0%
11.5%
12.0%
12.5%
13.0%
13.5%
14.0%
14.5%
5,298.85
5,175.42
5,054.67
4,936.53
4,820.94
4,707.82
4,597.10
4,488.72
4,382.61
4,278.72
4,176.99
4,077.35
3,979.76
3,884.15
5,406.60
5,281.22
5,158.58
5,038.59
4,921.18
4,806.29
4,693.85
4,583.78
4,476.03
4,370.53
4,267.22
4,166.04
4,066.94
3,969.87
5,515.38
5,388.03
5,263.47
5,141.61
5,022.38
4,905.70
4,791.51
4,679.74
4,570.32
4,463.19
4,358.29
4,255.56
4,154.94
4,056.38
5,625.19
5,495.86
5,369.36
5,245.60
5,124.52
5,006.04
4,890.08
4,776.59
4,665.49
4,556.71
4,450.21
4,345.90
4,243.75
4,143.69
5,736.05
5,604.71
5,476.25
5,350.58
5,227.63
5,107.32
4,989.58
4,874.35
4,761.54
4,651.11
4,542.98
4,437.09
4,333.38
4,231.80
5,847.96
5,714.59
5,584.15
5,456.54
5,331.70
5,209.55
5,090.01
4,973.01
4,858.49
4,746.38
4,636.60
4,529.11
4,423.83
4,320.72
Cost of new machine, today, is $2,700. Requires $400 in shipping and installation.
New machine to be depreciated using Straight Line to a salvage of $600
Machine life 5 years after which its market value is expected to be $800
The new project will require an initial increase in inventory of $300, an increase in A/R of $200, and an incre
in A/P of $150
Expected units to be sold first year is 2,000
Annual sales growth rate 6%
Unit price: $4
Unit variable costs: 50%
Annual general and administrative expense: $1,500
Tax rate: 30%
1) Calculate Initial outlay (Initial investment)
2) Calculate Operating Cash Flows for the next 5 years
3) Calculate Terminal Cash Flow in the 5th year
4) Using 8% cost of capital, Calculate NPV, IRR, PI, MIRR
5) Should this new project be accepted? Why?
6) Perform a sensitivity analysis of the cost of capital and sales growth rate on NPV for the project.
TCF
1,090.00
5.0%
7,162.18
6,999.64
6,840.85
6,685.69
6,534.07
6,385.88
6,241.02
6,099.40
5.5%
7,294.75
7,129.69
6,968.44
6,810.88
6,656.92
6,506.44
6,359.35
6,215.55
6.0%
7,428.60
7,260.99
7,097.25
6,937.26
6,780.93
6,628.14
6,478.80
6,332.80
5,960.92
5,825.50
5,693.06
5,563.50
5,436.75
5,312.73
5,191.38
5,072.60
4,956.34
4,842.53
4,731.09
4,621.98
4,515.12
4,410.46
6,074.95
5,937.46
5,802.99
5,671.46
5,542.78
5,416.88
5,293.68
5,173.11
5,055.09
4,939.56
4,826.45
4,715.70
4,607.24
4,501.01
6,190.06
6,050.47
5,913.96
5,780.43
5,649.80
5,522.00
5,396.94
5,274.55
5,154.76
5,037.49
4,922.69
4,810.28
4,700.20
4,592.39