Question

				2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
Revenue					4,500	6,860	8,409	9,082	9,808	10,593	11,440	12,355	13,344	14,411
	Revenue Growth					52.4%	22.6%	8.0%	8.0%	8.0%	8.0%	8.0%	8.0%	8.0%
Production Costs
Fixed Production Expense (excl depreciation)					575	575	587	598	610	622	635	648	660	674
Variable Production Costs					2,035	3,404	4,291	4,669	5,078	5,521	6,000	6,519	7,079	7,685
Depreciation					152	152	152	152	164	178	192	207	224	242
Total Production Costs				0	2,762	4,131	5,029	5,419	5,853	6,321	6,827	7,373	7,963	8,600
Selling, General & Administrative				1,250	1,155	1,735	2,102	2,270	2,452	2,648	2,860	3,089	3,336	3,603
Total Operating Expenses				1,250	3,917	5,866	7,132	7,690	8,305	8,969	9,687	10,462	11,299	12,203
Operating Profit				(1,250)	583	994	1,277	1,392	1,503	1,623	1,753	1,893	2,045	2,209
Working Capital Assumptions:
Minimum Cash Balance as % of Sales					3.0%	3.0%	3.0%	3.0%	3.0%	3.0%	3.0%	3.0%	3.0%	3.0%
Days Sales Outstanding					59.2x	59.2x	59.2x	59.2x	59.2x	59.2x	59.2x	59.2x	59.2x	59.2x
Inventory Turnover (prod. cost/ending inv.)					7.7x	8.3x	12.7x	12.7x	12.7x	12.7x	12.7x	12.7x	12.7x	12.7x
Days Payable Outstanding (based on tot. op. exp.)					30.8x	30.9x	31.0x	31.0x	31.0x	31.0x	31.0x	31.0x	31.0x	31.0x
Capital Expenditures				1,470	952	152	152	334	361	389	421	454	491	530

Show work to solve

Cashflow

NVP

Payback

IRR

Answer 1

Year	0	1	2	3	4	5	6	7	8	9	10
	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	NPV
Revenue		4,500	6,860	8,409	9,082	9,808	10,593	11,440	12,355	13,344	14,411	3,359
Revenue Growth			52.40%	22.60%	8.00%	8.00%	8.00%	8.00%	8.00%	8.00%	8.00%
Production Costs
Fixed Production Expense (excl depreciation)		575	575	587	598	610	622	635	648	660	674
Variable Production Costs		2,035	3,404	4,291	4,669	5,078	5,521	6,000	6,519	7,079	7,685
Depreciation		152	152	152	152	164	178	192	207	224	242
Total Production Costs	0	2,762	4,131	5,029	5,419	5,853	6,321	6,827	7,373	7,963	8,600
Selling, General & Administrative	1,250	1,155	1,735	2,102	2,270	2,452	2,648	2,860	3,089	3,336	3,603
Total Operating Expenses	1,250	3,917	5,866	7,132	7,690	8,305	8,969	9,687	10,462	11,299	12,203
Operating Profit	-1,250	583	994	1,277	1,392	1,503	1,623	1,753	1,893	2,045	2,209
Add: Depreciation	0	152	152	152	152	164	178	192	207	224	242
Operating Cash Flow	-1,250	735	1,146	1,429	1,544	1,667	1,801	1,945	2,100	2,269	2,451
Working Capital Assumptions:
Minimum Cash Balance as % of Sales		3.00%	3.00%	3.00%	3.00%	3.00%	3.00%	3.00%	3.00%	3.00%	3.00%
Cash	0	135	206	252	272	294	318	343	371	400	432
Days Sales Outstanding		59.2x	59.2x	59.2x	59.2x	59.2x	59.2x	59.2x	59.2x	59.2x	59.2x
DSO(A/R)=(Sales*59.2)/365		730	1,113	1,364	1,473	1,591	1,718	1,855	2,004	2,164	2,337
Inventory Turnover (prod. cost/ending inv.)		7.7	8.3	12.7	12.7	12.7	12.7	12.7	12.7	12.7	12.7
Inventory(Prod. Cost/ITO)		359	498	396	427	461	498	538	581	627	677
Days Payable Outstanding (based on tot. op. exp.)		30.8	30.9	31	31	31	31	31	31	31	31
Accounts Payable=(Op. exp*DPO)/365		-331	-497	-606	-653	-705	-762	-823	-889	-960	-1,036
Working Capital(Cash+DSO+Inventory-A/P)		893	1,320	1,406	1,519	1,641	1,772	1,914	2,067	2,232	2,410
Fund required for the working Capital	893	1,320	1,406	1,519	1,641	1,772	1,914	2,067	2,232	2,410
Additional fund invested in the working Capital	-893	-427	-87	-113	-121	-131	-142	-153	-165	-178	2,410
Capital Expenditures	-1,470	-952	-152	-152	-334	-361	-389	-421	-454	-491	-530
Total Capital (Outflow)/Inflow	-2,363	-1,379	-239	-265	-455	-492	-531	-574	-619	-669	1,880
Free Cash Flow(Operating Cash Flow- (Capital(outflow)/inflow)	-3,613	-644	907	1,164	1,089	1,175	1,270	1,371	1,481	1,600	4,331
Discount Factor=1/(1+10%)^n	1.00000	0.90909	0.82645	0.75131	0.68301	0.62092	0.56447	0.51316	0.46651	0.42410	0.38554
Discounted Free Cash Flow	-3,613	-585	750	875	743	729	717	704	691	678	1,670
Lets discount this project by 21%
Discount Factor=1/(1+21%)^n	1.00000	0.82645	0.68301	0.56447	0.46651	0.38554	0.31863	0.26333	0.21763	0.17986	0.14864
Discounted Free Cash Flow	-3,613	-532	620	657	508	453	405	361	322	288	644	112
Lets discount this project by 22%
Discount Factor=1/(1+22%)^n	1.00000	0.81967	0.67186	0.55071	0.45140	0.37000	0.30328	0.24859	0.20376	0.16702	0.13690
Discounted Free Cash Flow	-3,613	-527	609	641	491	435	385	341	302	267	593	-76
IRR=(21+(112/(112+76))*(22-21))/100	21.60%
Note: Since Tax rate is not given we assueme there is no tax
Assumed :Working Capital required for the year injected at the start of the year
Assumed : the working capital invested will be released 100% at the end of the project
Assumed: Since cost of Capital is not given we assume cost of capital of the project is 10%
Free Cash Flow	-3,613	-644	907	1,164	1,089	1,175	1,270	1,371	1,481	1,600	4,331	10,131
Cummulative Free Cash Flow	-3,613	-4,257	-3,349	-2,185	-1,097	78	1,348	2,719	4,200	5,800	10,131
Payback Period=4+1097/(1097+78)	4.93	Years