Page 1Chapter 13. Ch 13-11 Build a Modela. Develop a spreadsheet model and use it to find the project’s NPV, IRR, and payback. Key Output: NPV =Part 1. Input Data (in thousands of dollars)IRR =MIRR =Equipment cost$10,000 Net Operating WC/sales10%Market value of equipment at Year 4$500 First year sales (in units)1,000 Tax rate40%Sales price per unit$24.00WACC10%Variable cost per unit$17.50Inflation3.0%Non-variable costs$1,000Part 2. Depreciation and Amortization ScheduleYearsAccum'dYearInitial Cost1 2 3 4 Depr'nEquipment Depr'n Rate20.0%32.0%19.0%12.0%Equipment Depr'n, DollarsEnding Bk Val: Cost - Accum Dep'rnPart 3. Net Salvage Values, in Year 4EquipmentEstimated Market Value in Year 4Book Value in Year 4Expected Gain or LossTaxes paid or tax creditNet cash flow from salvagePart 4. Projected Net Cash Flows (Time line of annual cash flows)Years0 1 2 3 4 Investment Outlays at Time Zero:EquipmentOperating Cash Flows over the Project's Life:Units soldSales priceVariable costsSales revenueVariable costsNon-variable operating costsDepreciation (equipment)Oper. income before taxes (EBIT)Taxes on operating income (40%)Net Operating Profit After Taxes (NOPAT)Add back depreciationOperating cash flowTerminal Year Cash Flows:Required level of net operating working capitalRequired investment in NOWCTerminal Year Cash Flows:Net salvage value
This is the end of the preview.
access the rest of the document.