Homework 12 Solution 2010 (2)

Homework 12 Solution 2010 (2) - Determine the NPV and IRR...

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Maximum Score Step 1 200 Step 2 300 Step 3 500 Sensitivities 1000 Total 2000 Determine the NPV and IRR of the investment outlined in the "Given requested, then copy your worksheet from Step 1 to Step 2 and then worked as you choose, but Index Cells are recommended
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Corrected Information". Work the solution in Steps as Step 2 to Step 3 etc. The sensitivities can we
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Oxygen Delignification Example Annual Tons 650,000 Current Sequence DoEo+pD Current Cost per Ton $34.75 in Year 0 Proposed Sequence ODoEo+pD Proposed Cost per Ton $26.00 in Year 0 Initial Capital Cost $25,000,000 Spending Schedule 50% in Year -1 Future Maintenance Capital 2% of original investmen Project Life 10 years Terminal Value 5 x Year 10 EBITDA Tax 35% (negative tax okay) Discount Rate 12%
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Starting in Year 1 1.00% 1.00% 1.50% 0.50% 1.50% t 1.00% Improvement (% per Year) Inflation (% per Year)
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Step 1 - Depreciation and Capital Investment 200 Points Year Capital Investment Annual Depreciation -1 $12,500,000 0 $12,500,000 $3,572,500 1 $505,000 $6,194,665 2 $510,050 $4,569,061 3 $515,151 $3,409,351 4 $520,302 $2,585,294 5 $525,505 $2,631,418 6 $530,760 $2,682,978 7 $536,068 $1,615,080 8 $541,428 $527,603 9 $546,843 $532,879 10 $552,311 $538,208 Check $30,283,417 Total Investment = $30,283,417 Check
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Project Year -1 0 1 Asset Value preciation Factors -> 14.29% 24.49% $21,427,500 $3,572,500 $6,122,500 $15,737,836 $72,165 $11,678,825 $8,784,625 $6,719,633 $4,613,720 $2,461,501 $1,382,489 $1,396,314 $1,410,277 $1,424,380 $1,424,380 $28,859,037 $3,572,500 $6,194,665 Asset Value + Total Depreciation $30,283,417
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2 3 4 5 17.49% 12.49% 8.93% 8.92% $4,372,500 $3,122,500 $2,232,500 $2,230,000 $123,675 $88,325 $63,075 $45,097 $72,886 $124,911 $89,208 $63,705 $73,615 $126,160 $90,100 $74,351 $127,422 $75,095 $4,569,061 $3,409,351 $2,585,294 $2,631,418
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6 7 8 9 8.93% 4.46% 0.00% 0.00% $2,232,500 $1,115,000 $- $- $45,046 $45,097 $22,523 $- $45,547 $45,496 $45,547 $22,748 $64,342 $46,003 $45,951 $46,003 $91,001 $64,986 $46,463 $46,411 $128,696 $91,911 $65,636 $46,928 $75,846 $129,983 $92,830 $66,292 $76,604 $131,283 $93,758 $77,370 $132,596 $78,144 $2,682,978 $1,615,080 $527,603 $532,879
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10 0.00% $- $- $- $22,976 $46,463 $46,875 $47,397 $66,955 $94,696 $133,922 $78,925 $538,208
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Step 2 Calculate the Annual Savings 300 Points Year Capital Investment Annual Depreciation -1 $12,500,000 $- 0 $12,500,000 $3,572,500 1 $505,000 $6,194,665 2 $510,050 $4,569,061 3 $515,151 $3,409,351 4 $520,302 $2,585,294 5 $525,505 $2,631,418 6 $530,760 $2,682,978 7 $536,068 $1,615,080 8 $541,428 $527,603 9 $546,843 $532,879 10 $552,311 $538,208 Check Base C Base C Proposed C
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Proposed C
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Project Year -1 0 1 Asset Value preciation Factors -> 14.29% 24.49% $- $- $- $21,427,500 $3,572,500 $6,122,500 $15,737,836 $- $72,165 $11,678,825 $- $- $8,784,625 $- $- $6,719,633 $- $- $4,613,720 $- $- $2,461,501 $- $- $1,382,489 $- $- $1,396,314
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This note was uploaded on 08/22/2011 for the course WPS 491 taught by Professor Phillips during the Spring '11 term at N.C. State.

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Homework 12 Solution 2010 (2) - Determine the NPV and IRR...

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