Question

		Please complete this worksheet showing all calculations for this case. Submit this to your professor for grading. Complete all colored spaces.
		CONCH REPUBLIC ELECTRONICS
Student Name:			Student
		Assumptions, provided in the text
			Equipment	$      34,500,000.00
			Salvage value	$       3,500,000.00
			R&D	$          750,000.00
			Marketing study	$          200,000.00
				Year 1	Year 2	Year 3	Year 4	Year 5
			Sales(units)	64000	106000	87000	78000	54000
			Depreciation rate	14.29%	24.49%	17.49%	12.49%	8.93%
			Price	$                480.00
			VC	$                205.00	per unit
			FC	$       5,100,000.00
			Tax rate	35%
			NWC percentage	20%
			Required return	12%
RUBRIC
Earned	Maximum
				Initial Cost Outlay	1	2	3	4	5
					Year 1	Year 2	Year 3	Year 4	Year 5
	2		Sales		$30,720,000.00	$50,880,000.00	$41,760,000.00	$37,440,000.00	$25,920,000.00
	2		Variable cost		$13,120,000.00	$21,730,000.00	$17,835,000.00	$15,990,000.00	$11,070,000.00
	2		Fixed costs		$5,100,000.00	$5,100,000.00	$5,100,000.00	$5,100,000.00	$5,100,000.00
	5		Depreciation		$4,930,050.00	$8,449,050.00	$6,034,050.00	$4,309,050.00	$3,080,850.00
	2		EBT		$7,569,950.00	$15,600,950.00	$12,790,950.00	$12,040,950.00	$6,669,150.00
	3		Tax		$2,649,482.50	$5,460,332.50	$4,476,832.50	$4,214,332.50	$2,334,202.50
			NI    (net income)		$4,920,467.50	$10,140,617.50	$8,314,117.50	$7,826,617.50	$4,334,947.50
			Depreciation		$4,930,050.00	$8,449,050.00	$6,034,050.00	$4,309,050.00	$3,080,850.00
	2		OCF (operating cash flow)		$9,850,517.50	$   18,589,667.50	$14,348,167.50	$12,135,667.50	$7,415,797.50
									.
			NWC
			Beginning Balance of NWC		$6,144,000.00	$10,176,000.00	$8,352,000.00	$7,488,000.00	$5,184,000.00
			Changes in Net Working Capital		$4,032,000.00	-$1,824,000.00	-$864,000.00	-$2,304,000.00
	5		Net Working Capital Cash Flow		$3,706,517.50	$8,413,667.50	$5,996,167.50	$4,647,667.50	$48,289,609.30
				-34,500,000.00
	5		Net CF	$         (34,500,000)	$3,706,517.50	$8,413,667.50	$5,996,167.50	$4,647,667.50	$48,289,609.00
			Enter your calculations for book value of equipment and determining the cash flow on the sale of the equipment
			Enter in the cash flow from the equipment in 5 years
	10		Cash flow on Project
	2		Discounted Cash Flow
	10	1	Payback
	10	2	Profitability Index	1.290
	20	3	Internal Rate of Return	20.0%
	20	4	Net Present Value	$10,139,166.32

Answer 1

	0	1	2	3	4	5
Sales units		64000	106000	87000	78000	54000
Sales revenue		30720000	50880000	41760000	37440000	25920000
Variable cost		13120000	21730000	17835000	15990000	11070000
Fixed cost		5100000	5100000	5100000	5100000	5100000
Depreciation		4930050	8449050	6034050	4309050	3080850
EBT		7569950	15600950	12790950	12040950	6669150
Tax at 35%		2649483	5460333	4476833	4214333	2334203
NNOPAT		4920468	10140618	8314118	7826618	4334948
Add: Depreciation		4930050	8449050	6034050	4309050	3080850
OCF		9850518	18589668	14348168	12135668	7415798
Capital expenditure	34500000
NWC:						`
NWC required (20%)		6144000	10176000	8352000	7488000	5184000
Change in NWC		6144000	4032000	-1824000	-864000	-7488000
Net CF	-34500000	3706518	14557667.5	16172168	12999668	14903798
PVIF at 12%	1	0.89286	0.79719	0.71178	0.63552	0.56743
PV	-34500000	3309391	11605283	11511029	8261524	8456815	43144042
NPV	8644042
Cumulative cash flows		-30793483	18264185	30729835	29171835	27903465
Payback period = 1+30793483/14557668 =	3.12	Years
PI = 43144042/34500000 =	1.25
IRR:
PVIF AT 20%	1	0.83333	0.69444	0.57870	0.48225	0.40188
PV at 20%	-34500000	3088765	10109491	9358893	6269130	5989502	315781
PVIF at 21%	1	0.82645	0.68301	0.56447	0.46651	0.38554
PV at 21%	-34500000	3063238	9943083	9128767	6064441	5746059	-554413
IRR = 20+554413/(315781+554413) =	20.64