SITUATION NO.

03 - National Toys
Strategy No. 1
Sr. No References 0 Year - 1 Year - 2
1 Volume $ 100,000 $ 105,000
2 Sale Price $ 8.24 $ 8.49
3 Variable Cost $ 3.09 $ 3.18
4 Total Sales (1x2) $ 824,000 $ 891,156
5 Total Variable Cost (1x3) $ 309,000 $ 334,184
6 Fixed Cost $ 114,400.00 $ 118,976.00
7 Depreciation $375,000.00 $281,250.00
8 EBIT $ 872,400.00 $ 1,063,065.50
9 Taxes $ 261,720 $ 318,920
10 Depreciation $375,000.00 $281,250.00
11 Operating Cashflow $ (1,500,000) $ 985,680 $ 1,025,396

Depreciation (Reducing Balance) 25%

Years Opening Depreciation Closing
1 $ (1,500,000.00) $ 375,000.00 $ (1,125,000.00)
2 $ (1,125,000.00) $ 281,250.00 $ (843,750.00)
3 $ (843,750.00) $ 210,938.00 $ (632,812.00)
4 $ (632,812.00) $ 158,293.00 $ (474,519.00)
5 $ (474,519.00) $ (474,519.00) $ -

Strategy No. 2
Sr. No References 0 Year - 1 Year - 2
1 Volume $ 110,000 $ 115,500
2 Sale Price $ 7.21 $ 7.43
3 Variable Cost $ 3.04 $ 3.13
4 Total Sales (1x2) $ 793,100 $ 857,738
5 Total Variable Cost (1x4) $ 334,235 $ 361,475
6 Fixed Cost $ 114,400.00 $ 118,976.00
7 Depreciation $375,000.00 $281,250.00
8 EBIT $ 866,735.00 $ 1,056,938.80
9 Taxes $ 260,021 $ 317,082
10 Depreciation $375,000.00 $281,250.00
11 Operating Cashflow $ (1,500,000) $ 981,715 $ 1,021,107

NPV - Strategy No. 1

Year Cashflows Rate 20% NPV
0 $ (1,500,000) 1.00 $ (1,500,000)
1 $ 985,680 0.83 $ 821,400
2 $ 1,025,396 0.69 $ 709,232
 3 $ 1,073,049 0.57 $ 616,020
4 $ 1,135,957 0.48 $ 541,271
5 $ 1,311,024 0.40 $ 518,492
$ 4,031,106 $ 1,706,415

NPV - Strategy No. 2

Year Cashflows Rate 20% NPV
0 $ (1,500,000) 1.00 $ (1,500,000)
1 $ 981,715 0.83 $ 818,095
2 $ 1,021,107 0.69 $ 706,266
3 $ 1,070,902 0.57 $ 614,787
4 $ 1,134,883 0.48 $ 540,760
5 $ 1,304,406 0.40 $ 515,874
$ 4,013,013 $ 1,695,782
 Year - 3 Year - 4 Year - 5
$ 110,250 $ 115,763 $ 121,551
$ 8.74 $ 9.00 $ 9.27
$ 3.22 $ 3.32 $ 3.36
$ 963,785 $ 1,042,334 $ 1,127,284
$ 355,005 $ 383,938 $ 408,410
$ 123,735.04 $ 128,684.44 $ 133,831.82
$210,938.00 $158,293.00 $474,519.00
$ 1,231,587.25 $ 1,396,663.06 $ 1,195,006.83
$ 369,476 $ 418,999 $ 358,502
$210,938.00 $158,293.00 $474,519.00
$ 1,073,049 $ 1,135,957 $ 1,311,024

Year - 3 Year - 4 Year - 5

$ 121,275 $ 127,339 $ 133,706
$ 7.65 $ 7.88 $ 8.11
$ 3.20 $ 3.31 $ 3.30
$ 927,643 $ 1,003,246 $ 1,085,011
$ 388,080 $ 421,491 $ 441,229
$ 123,735.04 $ 128,684.44 $ 133,831.82
$210,938.00 $158,293.00 $474,519.00
$ 1,228,520.31 $ 1,395,128.90 $ 1,185,552.35
$ 368,556 $ 418,539 $ 355,666
$210,938.00 $158,293.00 $474,519.00
$ 1,070,902 $ 1,134,883 $ 1,304,406