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Paper's_Paper_Solution

# Paper's_Paper_Solution - Paper's Paper Calculations Item...

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Paper's Paper Part A See additional tabs at bottom for remaining parts. Calculations Year Item 0 1 2 3 4 Machine BS \$200,000 Machine Rich \$70,000 Machine Green \$120,000 \$(25,000) Machine Rented \$40,000 \$40,000 Labour BSNV \$120,000 \$120,000 \$120,000 \$120,000 Labour Rich \$25,000 \$25,000 \$25,000 \$25,000 CM \$1.00 Demand B 60,000 69,000 79,350 91,253 Demand S 80,000 80,000 80,000 80,000 Demand NVR 100,000 120,000 144,000 187,200 Total 240,000 269,000 303,350 358,453 Gross Profit \$240,000 \$269,000 \$303,350 \$358,453 Working Capital \$24,000 \$26,900 \$30,335 \$35,845 \$42,830 Change in WC \$24,000 \$2,900 \$3,435 \$5,510 \$6,985 Rent \$80,000 \$81,600 \$83,232 \$84,897 \$86,595 Subtotals \$494,000 \$(10,500) \$(37,333) \$(52,943) \$(79,873) Cost of Capital 8% Discounted \$494,000 \$(9,722) \$(32,007) \$(42,028) \$(58,709) Total \$(33,841) Yes - expand!! (Check) \$(33,841)

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5 6 \$(30,000) \$40,000 \$120,000 \$120,000 \$25,000 \$25,000 104,940 120,681 80,000 80,000 243,360 316,368 428,300 517,049 \$428,300 \$517,049 \$51,705 \$8,875 \$(51,705) \$88,326 \$(146,099) \$(453,754) \$(99,433) \$(285,942)
Surrey Expansion Part B Calculations Year Item 0 1 2 3 4 Machine \$100,000 Labour \$40,000 \$40,000 \$40,000 \$40,000 CM \$1.00 Demand S 80,000 80,000 80,000 80,000 Total 80,000 80,000 80,000 80,000 Gross Profit \$80,000 \$80,000 \$80,000 \$80,000 Working Capital \$8,000 \$8,000 \$8,000 \$8,000 \$8,000 Change in WC \$8,000 \$- \$- \$- \$- Rent \$20,000 \$20,400 \$20,808 \$21,224 \$21,649 Subtotals \$128,000 \$(19,600) \$(19,192) \$(18,776) \$(18,351) Cost of Capital 8% Discounted \$128,000 \$(18,148) \$(16,454) \$(14,905) \$(13,489) Total \$22,561 Don't expand.

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5 6 \$40,000 \$40,000 80,000 80,000 80,000 80,000 \$80,000 \$80,000 \$8,000 \$- \$(8,000) \$22,082 \$(17,918) \$(48,000) \$(12,195) \$(30,248)
North Vancouver Expansion Part B Calculations Year Item 0 1 2 3 4 Machine Green \$120,000 \$(25,000) Machine Rented \$40,000 \$40,000 Labour \$40,000 \$40,000 \$40,000 \$40,000 CM \$1.00 Demand NV 50,000 60,000 72,000 93,600 Total 50,000 60,000 72,000 93,600 Gross Profit \$50,000 \$60,000 \$72,000 \$93,600 Working Capital

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