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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 I 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 investment 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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