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Case Study 13
Case Study 13
Project - 1
1992 1993 1994
Sr. No References
0 Year - 1 Year - 2
1 Production (5% Increase in Units) 5,000 5,250
2 Sale $ 50,000 $ 52,500
3 Less: Material (50% of Sale) $ 25,000 $ 26,250
4 Less: Labour & FOH (12% of Sale) $ 6,000 $ 6,300
5 Less: Depreciation $ 45,000 $ 72,000
6 EBIT $ (26,000) $ (52,050)
7 Less: Taxes (35%) $ (9,100) $ (18,218)
8 Add: Depreciation $ 45,000 $ 72,000
9 Operating Cash Flow $ 28,100 $ 38,168
10 Initial Cashflow $ (225,000)
11 Working Capital $ (10,000)
$ (235,000) $ 28,100 $ 38,168
Project - 2
1992 1993 1994
Sr. No References
0 Year - 1 Year - 2
1 Production (7% Increase in Units) 4,375 4,681
2 Sale $ 35,000 $ 37,450
3 Less: Material (43% of Sale) $ 15,050 $ 16,104
4 Less: Labour & FOH (10% of Sale) $ 3,500 $ 3,745
5 Less: Depreciation $45,000 $72,000
6 EBIT $ (28,550) $ (54,399)
7 Less: Taxes (35%) $ (9,993) $ (19,039)
8 Add: Depreciation $ 45,000 $ 72,000
9 Operating Cash Flow $ 26,443 $ 36,641
10 Initial Cashflow $ (225,000)
11 Working Capital $ (5,000)
$ (230,000) $ 26,443 $ 36,641
Project - 1 & 2 Combined
1992 1993 1994
Sr. No References
0 Year - 1 Year - 2
2 Sale $ 85,000 $ 89,950
3 Less: Material (Project 1+2) $ 40,050 $ 42,354
4 Less: Labour & FOH (Project 1+2) $ 9,500 $ 10,045
5 Less: Depreciation $45,000 $72,000
6 EBIT $ (9,550) $ (34,449)
7 Less: Taxes (35%) $ (3,343) $ (12,057)
8 Add: Depreciation $45,000 $72,000
9 Operating Cash Flow $ 38,793 $ 49,608
10 Initial Cashflow $ (225,000)
11 Working Capital (10000+5000) $ (15,000)
$ (240,000) $ 38,793 $ 49,608
Project - 1
1995 1996 1997 1998 1999 2000 2001 2002
Year - 3 Year - 4 Year - 5 Year - 6 Year - 7 Year - 8 Year - 9 Year - 10
5,513 5,788 6,078 6,381 6,700 7,036 7,387 7,757
$ 55,125 $ 57,881 $ 60,775 $ 63,814 $ 67,005 $ 70,355 $ 73,873 $ 77,566
$ 27,563 $ 28,941 $ 30,388 $ 31,907 $ 33,502 $ 35,178 $ 36,936 $ 38,783
$ 6,615 $ 6,946 $ 7,293 $ 7,658 $ 8,041 $ 8,443 $ 8,865 $ 9,308
$ 42,750 $ 27,000 $ 24,750 $ 13,500 $ - $ - $ - $ -
$ (21,803) $ (5,005) $ (1,655) $ 10,749 $ 25,462 $ 26,735 $ 28,072 $ 29,475
$ (7,631) $ (1,752) $ (579) $ 3,762 $ 8,912 $ 9,357 $ 9,825 $ 10,316
$ 42,750 $ 27,000 $ 24,750 $ 13,500 $ - $ - $ - $ -
$ 28,578 $ 23,747 $ 23,674 $ 20,487 $ 16,550 $ 17,378 $ 18,247 $ 19,159
$ 10,000
$ 28,578 $ 23,747 $ 23,674 $ 20,487 $ 16,550 $ 17,378 $ 18,247 $ 29,159
Project - 2
1995 1996 1997 1998 1999 2000 2001 2002
Year - 3 Year - 4 Year - 5 Year - 6 Year - 7 Year - 8 Year - 9 Year - 10
5,009 5,360 5,735 6,136 6,566 7,025 7,517 8,043
$ 40,072 $ 42,877 $ 45,878 $ 49,089 $ 52,526 $ 56,202 $ 60,137 $ 64,346
$ 17,231 $ 18,437 $ 19,727 $ 21,108 $ 22,586 $ 24,167 $ 25,859 $ 27,669
$ 4,007 $ 4,288 $ 4,588 $ 4,909 $ 5,253 $ 5,620 $ 6,014 $ 6,435
$42,750 $27,000 $24,750 $13,500 $ - $ - $ - $ -
$ (23,916) $ (6,848) $ (3,187) $ 9,572 $ 24,687 $ 26,415 $ 28,264 $ 30,243
$ (8,371) $ (2,397) $ (1,116) $ 3,350 $ 8,640 $ 9,245 $ 9,892 $ 10,585
$ 42,750 $ 27,000 $ 24,750 $ 13,500 $ - $ - $ - $ -
$ 27,204 $ 22,549 $ 22,678 $ 19,722 $ 16,047 $ 17,170 $ 18,372 $ 19,658
$ 5,000
$ 27,204 $ 22,549 $ 22,678 $ 19,722 $ 16,047 $ 17,170 $ 18,372 $ 24,658
Project - 1 & 2 Combined
1995 1996 1997 1998 1999 2000 2001 2002
Year - 3 Year - 4 Year - 5 Year - 6 Year - 7 Year - 8 Year - 9 Year - 10
$ 95,197 $ 100,758 $ 106,653 $ 112,903 $ 119,530 $ 126,557 $ 134,009 $ 141,912
$ 44,793 $ 47,378 $ 50,115 $ 53,015 $ 56,088 $ 59,345 $ 62,795 $ 66,452
$ 10,622 $ 11,233 $ 11,881 $ 12,567 $ 13,293 $ 14,063 $ 14,878 $ 15,743
$42,750 $27,000 $24,750 $13,500 $ - $ - $ - $ -
$ (2,969) $ 15,147 $ 19,907 $ 33,821 $ 50,149 $ 53,150 $ 56,336 $ 59,718
$ (1,039) $ 5,301 $ 6,968 $ 11,837 $ 17,552 $ 18,603 $ 19,718 $ 20,901
$42,750 $27,000 $24,750 $13,500 $ - $ - $ - $ -
$ 40,820 $ 36,845 $ 37,690 $ 35,484 $ 32,597 $ 34,548 $ 36,618 $ 38,817
$ 15,000
$ 40,820 $ 36,845 $ 37,690 $ 35,484 $ 32,597 $ 34,548 $ 36,618 $ 53,817
NPV - Project 1 IRR - Project 1 (Hit and Trail)
Year Cashflows Rate 10% NPV Year Cashflows
0 $ (235,000) 1.0000 $ (235,000) 0 $ (235,000)
1 $ 28,100 0.9091 $ 25,545 1 $ 28,100
2 $ 38,168 0.8265 $ 31,544 2 $ 38,168
3 $ 28,578 0.7513 $ 21,472 3 $ 28,578
4 $ 23,747 0.6830 $ 16,220 4 $ 23,747
5 $ 23,674 0.6209 $ 14,700 5 $ 23,674
6 $ 20,487 0.5645 $ 11,565 6 $ 20,487
7 $ 16,550 0.5132 $ 8,493 7 $ 16,550
8 $ 17,378 0.4665 $ 8,107 8 $ 17,378
9 $ 18,247 0.4241 $ 7,739 9 $ 18,247
10 $ 29,159 0.3856 $ 11,243 10 $ 29,159
$ (78,731)