Financial Analysis Overview - FINANCIAL ANALYSIS OVERVIEW Jody Deterville FINC615-1504B-01 Applied Managerial Finance Dr David Glazer Unit 5 Individual

# Financial Analysis Overview - FINANCIAL ANALYSIS OVERVIEW...

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FINANCIAL ANALYSIS OVERVIEW Jody Deterville FINC615-1504B-01 Applied Managerial Finance Dr. David Glazer December 21, 2015 Unit 5 Individual Project
TABLE OF CONTENTS Net present value (npv) and internal rate of return (irr) calculations Decision about investing into Apex Printing coffee packaging expansion Issues to be addressed Is there significant financial information to determine what to do? Was further financial information needed to be provided to make a decision? What financial figure was the primary factor in determining whether to invest or not? How would this particular financial information be able to be applied to other situations? What are some capital budgeting risk methodologies? References
NET PRESENT VALUE (NPV) AND INTERNAL RATE OF RETURN (IRR) CALCULATIONS Jody Deterville Revenue \$ 27,000,000.00 \$ 27,000,000.00 \$ 27,000,000.00 \$ 27,000,000.00 \$ 27,000,000.00 FIN 615 COS \$ (10,800,000.00) \$ (10,800,000.00) \$ (10,800,000.00) \$ (10,800,000.00) \$ (10,800,000.00) NPV and IRR calculations Depreciation \$ (7,000,000.00) \$ (7,000,000.00) \$ (7,000,000.00) \$ (7,000,000.00) \$ (7,000,000.00)   SG&A \$ (2,700,000.00) \$ (2,700,000.00) \$ (2,700,000.00) \$ (2,700,000.00) \$ (2,700,000.00)   Operating Inc \$ 6,500,000.00 \$ 6,500,000.00 \$ 6,500,000.00 \$ 6,500,000.00 \$ 6,500,000.00   Taxes \$ (2,275,000.00) \$ (2,275,000.00) \$ (2,275,000.00) \$ (2,275,000.00) \$ (2,275,000.00)   Net Income \$ 4,225,000.00 \$ 4,225,000.00 \$ 4,225,000.00 \$ 4,225,000.00 \$ 4,225,000.00   Add: Depreciation \$ 7,000,000.00 \$ 7,000,000.00 \$ 7,000,000.00 \$ 7,000,000.00 \$ 7,000,000.00   Add: Recovery NWC         \$ 5,000,000.00   Total Cash Flow \$ 11,225,000.00 \$ 11,225,000.00 \$ 11,225,000.00 \$ 11,225,000.00 \$ 16,225,000.00 Cost of Capital 10.00%           Time/yrs. 0 1 2 3 4 5 Cash flow Input here \$ (40,000,000.00) \$ 11,225,000.00 \$ 11,225,000.00 \$ 11,225,000.00 \$ 11,225,000.00 \$ 16,225,000.00 Discounted CF -40000000 10204545.45 9276859.504 8433508.64 7666826.036 10074448.47 NPV \$ 5,656,188.10 =cf1/((1+n)^1) =cf2/((1+n)^2) =cf3/((1+n)^3) =cf4/((1+n)^4) =cf5/((1+n)^5) PV factor   0.909090909 0.826446281 0.751314801 0.683013455 0.620921323               IRR 15.11%
DECISION ABOUT INVESTING INTO COFFEE PACKAGING EXPANSION OF APEX PRINTING Investors should invest into the coffee packaging expansion. Investment opportunity will yield high output and cash flows that will be beneficial in the overall amounts of the internal rate of return.