BCOR2200Project2 - Project 2 Conch Republic Electronics...

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Project 2 Name Conch Republic Electronics CU ID#: Input Area: Grading Criteria Equipment $17,000,000 Price $250 Item Pts Score Comments Salvage value $1,900,000 Variable costs $86 2 Inputs 13 13 Working Capital $5,500,000 incurred at yr 0, recovered at yr 5 Fixed costs $3,000,000 2 Model 67 67 R&D $750,000 sunk cost? Tax rate 35% 1 Results 36 36 Marketing study $200,000 sunk cost? Required return 18% Question 1 8 8 Question 2 8 8 Year 1 Year 2 Year 3 Year 4 Year 5 Question 3 4 4 Sales(units) 70,000 80,000 100,000 85,000 75,000 4 Question 4 4 4 Depreciation rate 14.29% 24.49% 17.49% 12.49% 8.93% 4 Question 5 10 10 Total Score 150 150 Output Area: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Initial Investments Equipment 17,000,000 0 Working capital investment 5,500,000 2 R&D? 750,000 2 Marketing study? 200,000 2 Annual Net After Tax Cash Flows Sales $17,500,000 $20,000,000 $25,000,000 $21,250,000 $18,750,000 2 Variable costs 6,020,000 6,880,000 8,600,000 7,310,000 6,450,000 2 Fixed costs 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 2 Depreciation 2,429,300 4,163,300 2,973,300 2,123,300 1,518,100 2 EBIT 2 Tax 2 Operating Cash Flow (OCF) 6 Terminal Year Cash Flows Net after-tax salvage value (=H46) $665,000 6 Working capital recovery 2 Overall Net Project CF 10 Cumulative CF 2 Payback period 8 After tax Salvage Calculation
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