Homework 11 Solution 2010

Homework 11 Solution 2010 - Maximum Score Step 1 200 Step 2...

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Unformatted text preview: Maximum Score Step 1 200 Step 2 200 Step 3 200 Sensitivities 400 Total 1000 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 Corrected Information". Work the solution in Steps as Step 2 to Step 3 etc. The sensitivities can we Oxygen Delignification Example Annual Tons 650,000 Current Sequence DoEo+pD Current Cost per Ton $34.75 Proposed Sequence ODoEo+pD Proposed Cost per Ton $26.00 Annual Savings $3,791,667 without depreciation Initial Capital Cost $25,000,000 Spending Schedule 0% 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% Savings per Ton $5.83 Step 1 - Depreciation and Capital Investment 200 Points Year Capital Investment Annual Depreciation-1 $- $- $25,000,000 $3,572,500 1 $500,000 $6,193,950 2 $500,000 $4,566,400 3 $500,000 $3,403,850 4 $500,000 $2,576,300 5 $500,000 $2,618,450 6 $500,000 $2,665,550 7 $500,000 $1,592,700 8 $500,000 $500,000 9 $500,000 $500,000 10 $500,000 $500,000 Check $30,000,000 $28,689,700 Tons per Year Base Case Annual Cost Proposed Case Annual Cost Bleaching Cost Bleaching Cos Fre Free Cas Project Year-1 1 Asset Value preciation Factors -> 14.29% 24.49% $- $21,427,500 $3,572,500 $6,122,500 $15,733,550 $71,450 $11,667,150 $8,763,300 $6,687,000 $4,568,550 $2,403,000 $1,310,300 $1,310,300 $1,310,300 $1,310,300 $1,310,300 Depreciation $3,572,500 $6,193,950 -1 1 650,000 650,000 $22,587,500 $22,587,500 $16,900,000 $16,900,000 t Savings, $ per Year $5,687,500 $5,687,500 st Savings, $ per Ton $8.75 $8.75 Incremental EBIT $2,115,000 $(506,450) Incremental EBITDA $5,687,500 $5,687,500 Tax at 35% $740,250 $(177,258) Net Income $1,374,750 $(329,193) Cash Flow, $ per Year $4,947,250 $5,864,758 ree Cash Flow, $ per Year $- $(20,052,750) $5,364,758 sh Flow for NPV Calculation $- $(20,052,750) $5,364,758 NPV @ 12% $10,845,074 IRR 23% 2 3 4 5 17.49% 12.49% 8.93% 8.92% $4,372,500 $3,122,500 $2,232,500 $2,230,000 $122,450 $87,450 $62,450 $44,650 $71,450 $122,450 $87,450 $62,450 $71,450 $122,450 $87,450 $71,450 $122,450 $71,450 $4,566,400 $3,403,850 $2,576,300 $2,618,450 2 3 4 5 650,000 650,000 650,000 650,000 $22,587,500 $22,587,500 $22,587,500 $22,587,500 $16,900,000 $16,900,000 $16,900,000 $16,900,000 $5,687,500 $5,687,500 $5,687,500 $5,687,500 $8.75 $8.75 $8.75 $8.75 $1,121,100 $2,283,650 $3,111,200 $3,069,050 $5,687,500 $5,687,500 $5,687,500 $5,687,500 $392,385 $799,278 $1,088,920 $1,074,168 $728,715 $1,484,373 $2,022,280 $1,994,883 $5,295,115 $4,888,223 $4,598,580 $4,613,333 $4,795,115 $4,388,223 $4,098,580 $4,113,333 $4,795,115 $4,388,223 $4,098,580 $4,113,333 6 7 8 9 8.93% 4.46% 0.00% 0.00% $2,232,500 $1,115,000 $- $- $44,600 $44,650 $22,300 $- $44,650 $44,600 $44,650 $22,300 $62,450 $44,650 $44,600 $44,650 $87,450 $62,450 $44,650 $44,600 $122,450 $87,450 $62,450 $44,650 $71,450...
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Homework 11 Solution 2010 - Maximum Score Step 1 200 Step 2...

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