Problem # 5 Exam 2 Profitability Analysis

Problem # 5 Exam 2 Profitability Analysis - in Years 4 to...

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Print Name: ______________________________________________ Problem # 5 (25 %) Profitability Analysis Your employer wants you to carry out a profitability analysis on the following envisioned new plant project. A fixed capital cost estimate for the plant came in at FCI (or TPI) = $15MM ($15,000,000) with a required working capital of WC = $2MM. The plant will have an estimated lifetime of 10 years with a salvage value of $1MM. The annual cash flow to the project (after taxes) is estimated to be $2MM in Yr 1, $3MM in Yr 2, $4MM in Yr 3, and $5MM
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Unformatted text preview: in Years 4 to 10. You are told to use an assumed interest rate of 5% in all of your calculations and to assume straight line depreciation. All of the following calculations need to be done by hand/calculator and not using the Economics Program (1) (6%) What is the %ROI after taxes? (2) (6%) What is the Minimum Payout Period (same as PBP) with No Interest Charge? (3) (13%) What is the Net Present Worth (same as NPV) of the Project, neglecting the construction period and starting with Yr 1 cash flow of $2MM...
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This note was uploaded on 11/14/2011 for the course CHEN 4520 taught by Professor Wiemer during the Fall '11 term at Colorado.

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