Project 2 Key

Project 2 Key - Project 2 Conch Republic Electronics Input...

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Project 2 Name Conch Republic Electronics CU ID#: Input Area: Grading Criteria Equipment $20,000,000 Price $250 Item Pts Score Comments Salvage value $3,000,000 Variable costs $86 Model 40 40 Working Capital $6,500,000 incurred at yr 0, recovered at yr 5 Fixed costs $3,000,000 Results 28 28 $750,000 sunk cost? Tax rate 35% Question 1 8 8 Marketing study $200,000 sunk cost? Required return 16% Question 2 8 8 Question 3 4 4 Year 1 Year 2 Year 3 Year 4 Year 5 Question 4 4 4 Sales(units) 70,000 80,000 100,000 85,000 75,000 Question 5 8 8 Depreciation rate 14.29% 24.49% 17.49% 12.49% 8.93% Total Score 100 100 Output Area: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Initial Investments Equipment 20,000,000 0 Working capital investment 1 2 Marketing study? 2 Annual Net After Tax Cash Flows Sales $17,500,000 2 Variable costs 2 Fixed costs 2 Depreciation 2 EBIT 2 Tax 2 Operating Cash Flow (OCF) 4 Terminal Year Cash Flows Net after-tax salvage value (=H46) $0 2 Working capital recovery 1 Overall Net Project CF 10 Cumulative CF 1 Payback period 6 After tax Salvage Calculation PI 6 Book value of equipment 1 IRR 8 Market value/sales price 1 NPV 8 Basis 1 Tax/tax credit 1 Net after-tax salvage 1
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40 Questions 1) Using your spreadsheet model, indicate how much change in NPV occurs with a 1% increase in the discount rate. NPV (at 16%) 2 NPV (at 17%) 2 $ change in NPV 2 % change in NPV 2 NPV at 16% and sales price $250.00 2 NPV at 16% and sales price $247.50 2 $ change in NPV 2 % change in NPV 2
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Project 2 Key - Project 2 Conch Republic Electronics Input...

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