# 3-1sol - Breakeven Year 1 EBITDA \$233,551 PROBLEM 3-1...

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Given EBITDA (Year 1) \$200,000 Growth Rate in EBITDA 5% Initial investment \$800,000 Depreciation (Straight line) over 5 years Estimated salvage value \$- Tax rate 35% Cost of capital 12% Solution a. 0 1 2 EBITDA \$200,000 \$210,000 Less: Depreciation Expense (160,000) (160,000) EBIT \$40,000 \$50,000 Less: Taxes (14,000) (17,500) NOPAT \$26,000 \$32,500 Plus: Depreciation Expense 160,000 160,000 Less: CAPEX (800,000) - - Less: Change in Working Capital - - - PFCF \$(800,000) \$186,000 \$192,500 b. NPV \$(85,926) c. Using "Goal Seek" to solve for the EBITDA in year 1 (C5) that yields a NPV of 0 (C28).

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Unformatted text preview: Breakeven Year 1 EBITDA \$233,551 PROBLEM 3-1: Clayton Manufactur Solution Legend = Value given in problem = Formula/Calculation/Analysis required = Qualitative analysis or Short answer required = Goal Seek or Solver cell = Crystal Ball Input = Crystal Ball Output Years 3 4 5 \$220,500 \$231,525 \$243,101 (160,000) (160,000) (160,000) \$60,500 \$71,525 \$83,101 (21,175) (25,034) (29,085) \$39,325 \$46,491 \$54,016 160,000 160,000 160,000 - - - - - - \$199,325 \$206,491 \$214,016 ring Company...
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## This note was uploaded on 07/24/2009 for the course FIN FIN taught by Professor Robbani during the Summer '09 term at University of Maryland Baltimore.

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3-1sol - Breakeven Year 1 EBITDA \$233,551 PROBLEM 3-1...

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