CapitalBudgetingUsingSimulation (1) - Project Net Present Value and Volatility using Simulation Year 1 sales is uniformly distributed betw $2000 and

CapitalBudgetingUsingSimulation (1) - Project Net Present...

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Year 0 Year 1 Sales growth rate Variable Costs as % of Sales 50% Sales 3,000 Variable Cost 1,500 Fixed Cash cost 60 Depreciation 100 Earnings Before Interest and Taxes 1,340 Tax 536 Net Operating Profit After Taxes 804 Depreciation 100 Investment in Net Working Capital 900 37 Investment in Fixed Assets 600 Free Cash Flow (CF) (1,500) 867 Present Value of Remaining CFs, PV(CFs) $3,131 $ 2,576 LN(PV1+CF1) 8.14 Cost of Capital 10.00% Net Present Value $1,631 Projected Net Working Capital Level 900 937 Investment in Net Working Capital 900 37 Project Net Present Value and Volatility using Simulation. Year 1 sales is u $2000 and $4000. Thereafter, sales are forecasted to grow exponentially at a r with a mean 4 percent and a standard deviation of 2 percent a year. Incrementa to be 50 percent of incremental revenues. Incremental working capital required $900 in year 0. Thereafter, net working capital is expected to be 30 percent of i following year. Incremental fixed cash cost are expected to be $60 in year 1 an thereafter. This three-year project requires an immediate investment of $600 in and equipment are to be depreciated over 6 years on a straight-line basis to z project the equipment can be sold for $100. The tax rate is 40% and the require
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  • Spring '17
  • Depreciation, Generally Accepted Accounting Principles, ADDIN

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