Copy of BUSI 408 - In-Class CF Solutions - Sensitivity

Copy of BUSI 408 - In-Class CF Solutions - Sensitivity -...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Disc Rate (51,623) P/Unit Chg (51,623) - 1 2 3 4 8.0% (45,902) $(0.50) (116,860) NWC (end) 5,000 5,500 6,050 6,655 9.0% (47,428) $(0.25) (100,551) Chg in NWC 5,000 500 550 605 (6,655) 10.0% (48,888) $- (84,242) - 1 2 3 4 11.0% (50,285) $0.25 (67,932) NWC (continuing) 5,000 5,500 6,050 6,655 7,321 12.0% (51,623) $0.50 (51,623) Chg in NWC 5,000 500 550 605 666 13.0% (52,904) $0.75 (35,313) 14.0% (54,132) $1.00 (19,004) 0 1 2 3 4 15.0% (55,309) a. Inflation rate per year 3% Equipment (50,000) Development Expense (50,000) Unit sales 10,000 20,000 25,000 30,000 Price/unit 5.50 6.00 6.50 7.00 $0.50 (51,623) $(0.50) $(0.25) $- $0.25 $0.50 $0.75 Variable Cost / Unit $2.50 $2.75 $3.00 $3.25 $0.25 $(0.50) (67,932) (51,623) (35,313) (19,004) (2,694) 13,615 $(0.25) (84,242) (67,932) (51,623) (35,313) (19,004) (2,694) Revenues 55,000 120,000 162,500 210,000 $- (100,551) (84,242) (67,932) (51,623) (35,313) (19,004) Total Variable Cost (25,000) (55,000) (75,000) (97,500) $0.25 (116,860) (100,551) (84,242) (67,932) (51,623) (35,313)
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Lease costs (48,000) (48,000) (48,000) (48,000) $0.50 (133,170) (116,860) (100,551) (84,242) (67,932) (51,623) Depreciation expense (12,500) (12,500) (12,500) (12,500) Marketing expenses (5,000) (5,150) (5,305) (5,464) inflation Operating expenses (8,000) (8,240) (8,487) (8,742) inflation Development Expense (50,000) Net Operating Profit (EBIT) (50,000) (43,500) (8,890) 13,208 37,795 Taxes @ 40% 20,000 17,400 3,556 (5,283) (15,118) NOPAT (30,000) (26,100) (5,334) 7,925 22,677 Add back depreciation 12,500 12,500 12,500 12,500 Change in NWC (5,000) (500) (550) (605) 6,655 Capital Expenditures (50,000) Residual value Total incremental FCF (85,000) (14,100) 6,616 19,820 41,832 Present Values @ 12% (85,000) (12,589) 5,274 14,107 26,585 NPV @ 12% (calc) (51,623) NPV @ 12% (formula) (51,623) Since product sales are terminated at end of year 4, recover accounts receivable at end of year 4. 12%...
View Full Document

Ask a homework question - tutors are online