Question
In: Finance
For the following project, calculate the undiscounted cash flow. Put result in Excel
For the following project, calculate the undiscounted cash flow. Put result in Excel
|
Year |
0 |
1 |
2 |
3 |
4 |
5 |
|
Unit Price |
- |
$105 |
$110 |
$115 |
$120 |
$125 |
|
Units Sold |
- |
900 |
1000 |
1100 |
1200 |
1300 |
|
Net Sales |
- |
|||||
|
Variable Costs |
- |
$54,000 |
$60,000 |
$66,000 |
$72,000 |
$78,000 |
|
Fixed Costs |
- |
$15,000 |
$15,750 |
$16,538 |
$17,364 |
$18,233 |
|
Depreciation |
- |
$10,000 |
$10,000 |
$10,000 |
$10,000 |
$10,000 |
|
PBIT |
- |
|||||
|
Tax@40% |
- |
|||||
|
NOPAT |
- |
Adjustments
|
Add back Depreciation |
- |
|||||
|
CapEx |
-$100,000 |
- |
- |
- |
- |
- |
|
Salvage value |
- |
- |
- |
- |
- |
$40,000 |
|
Net cash flow |
||||||
|
Cumulative cash flow |
Solutions
Expert Solution
| Year | 0 | 1 | 2 | 3 | 4 | 5 |
| Unit Price | - | $ 105 | $ 110 | $ 115 | $ 120 | $ 125 |
| Units Sold | - | 900 | 1000 | 1100 | 1200 | 1300 |
| Net Sales | - | $ 94,500 | $ 1,10,000 | $ 1,26,500 | $ 1,44,000 | $ 1,62,500 |
| Variable Costs | - | $ 54,000 | $ 60,000 | $ 66,000 | $ 72,000 | $ 78,000 |
| Fixed Costs | - | $ 15,000 | $ 15,750 | $ 16,538 | $ 17,364 | $ 18,233 |
| Depreciation | - | $ 10,000 | $ 10,000 | $ 10,000 | $ 10,000 | $ 10,000 |
| PBIT | - | $ 15,500 | $ 24,250 | $ 33,962 | $ 44,636 | $ 56,267 |
| Tax@40% | - | $ 6,200 | $ 9,700 | $ 13,585 | $ 17,854 | $ 22,507 |
| NOPAT | - | $ 9,300 | $ 14,550 | $ 20,377 | $ 26,782 | $ 33,760 |
| Adjustments | ||||||
| Add back Depreciation | - | $ 10,000 | $ 10,000 | $ 10,000 | $ 10,000 | $ 10,000 |
| CapEx | $ -1,00,000 | $ - | $ - | $ - | $ - | $ - |
| Salvage value | $ - | $ - | $ - | $ - | $ - | $ 40,000 |
| Net cash flow | $ -1,00,000 | $ 19,300 | $ 24,550 | $ 30,377 | $ 36,782 | $ 83,760 |
| Cumulative cash flow | $ -1,00,000 | $ -80,700 | $ -56,150 | $ -25,773 | $ 11,009 | $ 94,769 |
jeff jeffy answered 1 year agoRelated Solutions
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Using Excel (if applicable),
A company is considering a project that has the following cash
flow and WACC data. Note: CF0, CF2, and CF4 are negative Should the
company take on this project if its WACC is 15? Justify your answer
using NPV, IRR, and MIRR.
WACC:
15%
Year
0
1
2
3
4
Cash flows
- $15,000
$25,000
- $2,000
$12,000
- $1,000
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Years
Cash Flow (RM)
0
-10,000
1
2000
2
2000
3
4000
4
4000
5
5000
i) calculate NPV (8marks)
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YEAR
PROJECT CASH FLOW
0
-60,000
1
25,000
2
25,000
3
25,000
4
25,000
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Year
Cash Flow (Project I)
Cash Flow (Project II)
0
-$12,300
-$44,000
1
$1,800
$14,000
2
$6,000
$30,000
3
$2,000
$5,000
4
$5,000
$10,000
5
$7,000
$5,000
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internal rate of return (IRR) of Project I and Project II is 18%
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represents a financial break-even level for the project. Guthrie
Enterprises needs someone to supply it with 150,000 cartons of
machine screws per year to support its manufacturing needs over the
next five years, and you’ve decided to bid on the contract. It will
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