CAPITAL BUDGETING WORKSHEET

Equity Analysis of a Project

INPUT SHEET: USER ENTERS ALL BOLD NUMBERS
INITIAL INVESTMENT

CASHFLOW DETAILS

Initial Investment=

$50,000

Revenues in year 1=

Opportunity cost (if any)=

$7,484

Var. Expenses as % of Rev=

Lifetime of the investment

10

Deprec. method(1:St.line;2:DDB)=
Tax Credit (if any )=
Other invest.(non-depreciable)=

$40,000

Approach(1:Direct;2:CAPM)=

50%

1. Discount rate =

Fixed expenses in year 1=

$10,000

Salvage Value at end of project=

DISCOUNT RATE

2a. Beta

40%

Tax rate on net income=

b. Riskless rate=

If you do not have the breakdown of fixed and variable

10%

expenses, input the entire expense as a % of revenues.

c. Market risk premium =

Discount rate used=

LOAN DETAILS

WORKING CAPITAL
Initial Investment in Work. Cap=

$10,000

Borrowing (if any) =

$30,000

Interest rate on loan=

8%

Working Capital as % of Rev=

25%

Time period for loan =

Salvageable fraction at end=

100%

Type(1:Term;2:balloon)=

GROWTH RATES
1

Revenues

Do not enter

10.00%

10.00%

10.00%

10.00%

0.00%

0.00%

0.00%

Fixed Expenses

Do not enter

10.00%

10.00%

10.00%

10.00%

0.00%

0.00%

0.00%

CAPITAL BUDGETING WORKSHEET

Default: The fixed expense growth rate is set equal to the growth rate in revenues by default.
YEAR
0
1
2
3
INITIAL INVESTMENT
Investment
$50,000
- Tax Credit
$5,000
Net Investment
$45,000
+ Working Cap
$10,000
+ Opp. Cost
$7,484
+ Other invest.
$0
Initial Investment
$62,484
- Borrowing
$30,000
Net Initial Inv
$32,484
SALVAGE VALUE
Equipment
Working Capital
OPERATING CASHFLOWS
Lifetime Index
Revenues
-Var. Expenses
- Fixed Expenses
BTCF
- Depreciation
- Interest
Taxable Income
-Tax
Net Income
+ Depreciation
ATCF
- ? Work. Cap
- Princ. Rep.
NATCF
($32,484)
Discount Factor
1
Discounted CF
($32,484)

$0
$0

1
$40,000
$20,000
$0
$20,000
$10,000
$2,400
$7,600
$3,040
$4,560
$10,000
$14,560
$0
$5,114
$9,446
1.1
$8,588

$0
$0

1
$44,000
$22,000
$0
$22,000
$8,000
$1,991
$12,009
$4,804
$7,205
$8,000
$15,205
$1,000
$5,523
$8,683
1.21
$7,176

$0
$0

1
$48,400
$24,200
$0
$24,200
$6,400
$1,549
$16,251
$6,500
$9,751
$6,400
$16,151
$1,100
$5,965
$9,086
1.331
$6,826

$0
$0

1
$53,240
$26,620
$0
$26,620
$5,120
$1,072
$20,428
$8,171
$12,257
$5,120
$17,377
$1,210
$6,442
$9,725
1.4641
$6,642

$0
$0

1
$58,564
$29,282
$0
$29,282
$4,096
$557
$24,629
$9,852
$14,778
$4,096
$18,874
$1,331
$6,957
$10,586
1.61051
$6,573

$0
$0

1
$58,564
$29,282
$0
$29,282
$3,277
$0
$26,005
$10,402
$15,603
$3,277
$18,880
$0
$0
$18,880
1.771561
$10,657

$0
$0

1
$58,564
$29,282
$0
$29,282
$2,621
$0
$26,661
$10,664
$15,996
$2,621
$18,618
$0
$0
$18,618
1.9487171
$9,554

$0
$0

1
$58,564
$29,282
$0
$29,282
$486
$0
$28,796
$11,518
$17,278
$486
$17,764
$0
$0
$17,764
2.14358881
$8,287

CAPITAL BUDGETING WORKSHEET

Investment Measures
NPV =
$55,544
IRR =
32.15%
ROE =
99.34%

CAPITAL BUDGETING WORKSHEET

Loan life index

Total Payment
Interest payment
Princ. repaid
Rem. Balance

$30,000

Book Value (beginning)

Depreciation
BV(ending)
$50,000
- Debt Outstanding
$30,000
BV: Equity
$20,000

ANALYTICAL STATISTICS
PV: Net Contribution
WHAT IF?
Revenues
NPV
-1.00%
$54,877
-2.00%
$54,211
-3.00%
$53,545
-4.00%
$52,879
-5.00%
$52,213
-10.00%
$48,882
-20.00%
$42,220
-25.00%
$38,890
-50.00%
$22,236

1
$7,514
$2,400
$5,114
$24,886

1
$7,514
$1,991
$5,523
$19,364

LOAN DETAILS
1
$7,514
$1,549
$5,965
$13,399

$50,000
$10,000
$40,000
$24,886
$15,114

$40,000
$8,000
$32,000
$19,364
$12,636

BOOK VALUE & DEPRECIATION

$32,000
$25,600
$20,480
$6,400
$5,120
$4,096
$25,600
$20,480
$16,384
$13,399
$6,957
$0
$12,201
$13,523
$16,384

0.141840368

0.15147895

0.162081391

1
$7,514
$1,072
$6,442
$6,957

0.173744075

1
$7,514
$557
$6,957
$0

0.186573028

0
$0
$0
$0
$0

$16,384
$3,277
$13,107
$0
$13,107

0.182440797

SOME SUGGESTIONS FOR OTHER SENSITIVITY ANALYSES

1. Change the Variable cost as a % of Revenues
2. Change Fixed costs in $ amounts
3. Change the lifetime of the project
4. Change the depreciation method
5. Change the working capital as % of revenues
6. Change working capital salvage %
7. Change borrowing amount
8. Change the discount rate

0
$0
$0
$0
$0

$13,107
$2,621
$10,486
$0
$10,486

0.178684223

0
$0
$0
$0
$0

$10,486
$486
$10,000
$0
$10,000

0.175269155

CAPITAL BUDGETING WORKSHEET

1
10%
0.25
8.00%
5.50%

10.00%

10

0.00%

0.00%

0.00%

0.00%

CAPITAL BUDGETING WORKSHEET

$0
$0

1
$58,564
$29,282
$0
$29,282
$0
$0
$29,282
$11,713
$17,569
$0
$17,569
$0
$0
$17,569
2.357947691
$7,451

10

$10,000
$14,641

1
$58,564
$29,282
$0
$29,282
$0
$0
$29,282
$11,713
$17,569
$0
$17,569
$0
$0
$17,569
2.59374246
$16,274

10

CAPITAL BUDGETING WORKSHEET

11

CAPITAL BUDGETING WORKSHEET

0
$0
$0
$0
$0

$10,000
$0
$10,000
$0
$10,000

0.172164549

0
$0
$0
$0
$0

$10,000
$0
$10,000
$0
$10,000

0.141118483

12