HW_template - (32,000 $(19,200 $(11,520 $(11,520(4...

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Textbook Example BALDWIN Current market value of the warehouse $ 150,000 Resale value of warehouse after 5 years $ 150,000 Cost of bowling machine $ 100,000 market value at the end of five years $ 30,000 Price during the 1st year $ 20 Price growth 2% Production cost during the 1st year $ 10 Cost growth 10% Tax bracket 34% Discount rate 10% YEAR 0 1 2 3 4 5 NWC $ 10,000 ### $ 16,320 $ 24,970 $ 21,220 $ - Production (in units) 5,000 8,000 12,000 10,000 6,000 Depreciation Percentage of the bowling ball machine 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% Unit price $ 20.00 $ 20.40 $ 20.81 $ 21.22 $ 21.65 Unit costs $ 10.00 $ 11.00 $ 12.10 $ 13.31 $ 14.64 YEAR 0 1 2 3 4 5 (1) Total Revenue $ 100,000 $ 163,200 $ 249,696 $ 212,242 $ 129,892 (2) Total Costs $ (50,000) $ (88,000) $ (145,200) $ (133,100) $ (87,846) (3) Depreciation $ (20,000) $
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Unformatted text preview: (32,000) $ (19,200) $ (11,520) $ (11,520) (4) EBIT [(1)+(2)+(3)] $ 30,000 $ 43,200 $ 85,296 $ 67,622 $ 30,526 (5) Tax $ (10,200) $ (14,688) $ (29,001) $ (22,991) $ (10,379) (6) OCF [(1)+(2)+(5)] $ 39,800 $ 60,512 $ 75,495 $ 56,150 $ 31,667 (7) Bowling Ball Machine $ (100,000) $ 21,758 (8) Warehouse (Opportunity Cost) $ (150,000) $ 150,000 (9) Change in NWC $ (10,000) $ - $ (6,320) $ (8,650) $ 3,750 $ 21,220 (10) Total CF of Investment [(7)+(8)+(9)] $ (260,000) $ - $ (6,320) $ (8,650) $ 3,750 $ 192,978 (11) IATCF [(6)+(10)] $ (260,000) $ 39,800 $ 54,192 $ 66,845 $ 59,900 $ 224,645 NPV of the project $ 51,590 IRR of the project 15.68% A B C D E F G H I 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39...
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