event_2_doc_key - Event 2 Life-Cycle Cash Flow Estimates:...

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Unformatted text preview: Event 2 Life-Cycle Cash Flow Estimates: Key Costs are assumed positive for the computations. Net incomes show as negative numbers (red numbers) on this page. Use 0% for the interest rate. Questions: In each case show the cash flow in each year and total profit. 1. When the price per job is $1000, how much will profit will Pedro make over the life of the project. Cash Flow 0 10000 1 44630 2 43962 3 68226 4 10891 5 61139 Profit 238848 2. What price must Pedro charge for each job to breakeven (have 0 profit) after five years? Use the Excel Solver to find your answer. Use Solver to find the breakeven price: $681.54 Cash Flow 0 10000 1 3140 2 3807 3 4533 4 20956 5 13369 Profit 0 3. Show the cumulative cash flow for the solution of problem 2. The cumulative cash flow is the sum of all cash flows from time 0. Cash Flow Cumulative Cash Flow 0 10000 10000 1 3140 6860 2 3807 3053 3 4533 7586 4 20956 13369 5 13369 0 Profit 0 4. A cash flow problem exists if the cumulative cash flow for any year is negative. The cumulative cash flow is the sum of all cash flows from time 0. What price does Pedro have to charge per job, so that there is never a negative cumulative cash flow? There is a cash flow problem in year 4. Use Solver to find the value of the price that makes this number equal to zero. This price is $703.82. Cash Flow Cumulative Cash Flow 10000 10000 203 10203 465 9738 8990 18727 18727 0 16712 16712 16712 1 Fixed costs do not change with production. Variable costs are proportional to production. Positive numbers are costs and negative numbers are revenues. The worksheet shown is for the price equal to $1000. Cost Breakdown Structure Level 1:Pedro L2 L3 Description 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 0 1 1 1 1 1 1 1 1 2 2 2 3 3 3 3 3 4 4 5 5 5 6 7 0 0 1 2 3 4 5 6 7 0 1 2 0 1 2 3 4 0 1 0 2 2 0 0 Trimming Business Trucks Purchase Insurance Taxes and Fees Fuel Maintenance Cost Repairs Resale of trucks Shredder First Shredder Second Shredder Workers Tree Trimmers Overhead Pedro's Salary Supplies Gift Gift from Parents Loan Loan Principal Loan Payments Income Finish Quantity Units N1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 N2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 N3 1 1 1 1 1 20 1 1 1 1 1 1 1 16 6.4 1 1 1 1 1 1 1 1 1 Units Fixed Cost Var. Cost 0 0 0 0 0 0.15 0 0 0 0 0 0 0 15 15 0 50 0 0 0 0 0 -1000 0 Sub Total 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Item Cost Cost/Time Rate Time 0 P/F 1 Prod. 0 0 0 1 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 1 1 1 0 0 0 10000 10000 0.0% 1 1 150 1 1 0 1 1 1 1 0 0 1 0 0 1 1 1 1 1 1 0 0 0 1 1 1 44630 54630 2 1 150 1 1 0 1 1 1.05 1.5 0 0 1 0 0 1 1 1 1 1 1 0 0 0 1 1 1 43962 98592 3 1 200 4 1 100 5 1 150 NPW Cost 0 0 69000 18000 1500 7451 12000 3600 21000 0 5000 5000 0 180000 72000 150000 37500 0 40000 0 44000 55100 750000 0 1 0 1 0 1 69000 1 3600 1 300 20 900 1 1200 1 600 1 -21000 1 0 1 5000 1 5000 1 0 16 0 6.4 0 1 30000 1 0 1 0 1 -40000 1 0 1 -44000 1 11020 1 0 1 0 0 0 0 0 0 3 0 0 0 0 0 0 0 240 96 0 50 0 0 0 0 0 -1000 0 Cash Flow Cumulative Cash Flow 1 1 1 1 1 1 0 0 0 1 1 1 1 1 1 1.1025 1.157625 1.215506 2 2.5 3 1 2 3 0 0 1 1 1 1 0 0 0 1 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 68226 10891 61139 166818 177709 238848 Summary Level 2 Index Description 0 Trimming Business 1 Trucks 2 Shredder 3 Workers 4 Gift 5 Loan 6 Income 7 Finish NPW Cost 0 90551 10000 439500 40000 11100 750000 0 Estimate Level 1:Pedro NPW Cost 238848 2 ...
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This note was uploaded on 05/13/2010 for the course ME 01953 taught by Professor Bard during the Spring '10 term at University of Texas at Austin.

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