Chapter 11 Base Case Analysis

Chapter 11 Base Case Analysis - Initial Working Capital...

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Inputs Base Case Equipment Cost $3,400.00 Salvage Value, Year 4 $300.00 Units Sold, Year 1 550.00 Annual change in units sold, after Year 1 4.0% Sales price per unit, Year 1 $11.60 Annual change in sales price, after Year 1 2.0% Variable cost per unit (VC), Year 1 $6.00 Annual change in VC, after Year 1 2.0% Fixed Cost (FC), Year 1 $2,000.00 Annual change in FC, after Year 1 2.0% Project WACC 10.0% Tax Rate 40.0% Working Capital as % of nextr year's sales 12.7%
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Variables Year: 0 1 2 3 4 Unit Sales 550 572 595 619 Sales Price per Unit $11.60 $11.83 $12.07 $12.31 Variable Cost per Unit $6.00 $6.12 $6.24 $6.37 Fixed Costs $2,000.00 $2,040.00 $2,080.80 $2,122.42 Cash Flows At End of Year Year: 0 1 2 3 4 Investment: Equipment $(3,400.00)
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Unformatted text preview: Initial Working Capital $(807) Project Cash Flows: Sales Revenues $6,380 $6,768 $7,179 $7,616 Variable Costs $3,300 $3,501 $3,713 $3,939 Fixed Costs $2,000 $2,040 $2,081 $2,122 Depreciation $1,122 $1,530 $510 $238 EBIT $(42) $(303) $875 $1,316 Tax $(17) $(121) $350 $526 Net After Taxes $(25) $(182) $525 $790 Depreciation $1,122 $1,530 $510 $238 Salvage Value $- $- $- $300 Tax on Salvage Value $- $- $- $(120) Change in WC $(49) $(52) $(55) $963 Net Project Cash Flows $(4,207) $1,048 $1,296 $980 $2,171 PV $4,243 $953 $1,071 $736 $1,483 NPV $36 IRR 10.35% Profitability Index 1.01 Payback $(4,207) $(3,159) $(1,863) $(883) $1,288 3.41...
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This note was uploaded on 02/27/2012 for the course BUS 510 taught by Professor Mehdi during the Spring '11 term at University of La Verne.

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Chapter 11 Base Case Analysis - Initial Working Capital...

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