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C7-C9 HW - Question 1 Year Invest Sales Price Variable cost...

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Question 1 Year 0 1 2 3 4 5 6 7 8 9 Invest -953000 Sales 111000 4107000 4107000 4107000 4107000 4107000 4107000 4107000 4107000 4107000 Price 37 Variable cost 21 2331000 2331000 2331000 2331000 2331000 2331000 2331000 2331000 2331000 Fixed cost 954906 954906 954906 954906 954906 954906 954906 954906 954906 954906 Depreciation 105888.8888889 105888.88888889 105888.8888889 105888.888888889 105888.888888889 105888.8888889 105888.8888889 105888.8888889 105888.8888889 EBIT 715205.1111111 715205.11111111 715205.1111111 715205.111111111 715205.111111111 715205.1111111 715205.1111111 715205.1111111 715205.1111111 Tax 236017.6866667 236017.68666667 236017.6866667 236017.686666667 236017.686666667 236017.6866667 236017.6866667 236017.6866667 236017.6866667 NI 479187.4244444 479187.42444445 479187.4244444 479187.424444445 479187.424444445 479187.4244444 479187.4244444 479187.4244444 479187.4244444 OCF 585076.3133333 585076.31333333 585076.3133333 585076.313333333 585076.313333333 585076.3133333 585076.3133333 585076.3133333 585076.3133333 Total CF -953000 585076.3133333 585076.31333333 585076.3133333 585076.313333333 585076.313333333 585076.3133333 585076.3133333 585076.3133333 585076.3133333 Tax rate 33% WACC 14% NPV 1,941,005.00 Best-case Year 0 1 2 3 4 5 6 7 8 9 Invest $(953,000.00) Sales $111,000.00 $5,151,820.80 $5,151,820.80 $5,151,820.80 $5,151,820.80 $5,151,820.80 $5,151,820.80 $5,151,820.80 $5,151,820.80 $5,151,820.80 Price $37.00 Variable cost $21.00 $2,297,433.60 $2,297,433.60 $2,297,433.60 $2,297,433.60 $2,297,433.60 $2,297,433.60 $2,297,433.60 $2,297,433.60 $2,297,433.60 Fixed cost $954,906.00 $840,317.28 $840,317.28 $840,317.28 $840,317.28 $840,317.28 $840,317.28 $840,317.28 $840,317.28 $840,317.28 Depreciation $105,888.89 $105,888.89 $105,888.89 $105,888.89 $105,888.89 $105,888.89 $105,888.89 $105,888.89 $105,888.89 EBIT $1,908,181.03 $1,908,181.03 $1,908,181.03 $1,908,181.03 $1,908,181.03 $1,908,181.03 $1,908,181.03 $1,908,181.03 $1,908,181.03 Tax $629,699.74 $629,699.74 $629,699.74 $629,699.74 $629,699.74 $629,699.74 $629,699.74 $629,699.74 $629,699.74 NI $1,278,481.29 $1,278,481.29 $1,278,481.29 $1,278,481.29 $1,278,481.29 $1,278,481.29 $1,278,481.29 $1,278,481.29 $1,278,481.29 OCF $1,384,370.18 $1,384,370.18 $1,384,370.18 $1,384,370.18 $1,384,370.18 $1,384,370.18 $1,384,370.18 $1,384,370.18 $1,384,370.18 Total CF $(953,000.00) $1,384,370.18 $1,384,370.18 $1,384,370.18 $1,384,370.18 $1,384,370.18 $1,384,370.18 $1,384,370.18 $1,384,370.18 $1,384,370.18 Tax rate 33% WACC 14% Increase 1.12 Decrease 0.88 NPV $5,894,609.67 Worst-case Year 0 1 2 3 4 5 6 7 8 9 Invest $(953,000.00) Sales $111,000.00 $3,180,460.80 $3,180,460.80 $3,180,460.80 $3,180,460.80 $3,180,460.80 $3,180,460.80 $3,180,460.80 $3,180,460.80 $3,180,460.80 Price $37.00 Variable cost $21.00 $2,297,433.60 $2,297,433.60 $2,297,433.60 $2,297,433.60 $2,297,433.60 $2,297,433.60 $2,297,433.60 $2,297,433.60 $2,297,433.60 Fixed cost $954,906.00 $1,069,494.72 $1,069,494.72 $1,069,494.72 $1,069,494.72 $1,069,494.72 $1,069,494.72 $1,069,494.72 $1,069,494.72 $1,069,494.72 Depreciation $105,888.89 $105,888.89 $105,888.89 $105,888.89 $105,888.89 $105,888.89 $105,888.89 $105,888.89 $105,888.89 EBIT $(292,356.41) $(292,356.41) $(292,356.41) $(292,356.41) $(292,356.41) $(292,356.41) $(292,356.41) $(292,356.41) $(292,356.41) Tax $(96,477.61) $(96,477.61) $(96,477.61) $(96,477.61) $(96,477.61) $(96,477.61) $(96,477.61) $(96,477.61) $(96,477.61) NI $(195,878.79) $(195,878.79) $(195,878.79) $(195,878.79) $(195,878.79) $(195,878.79) $(195,878.79) $(195,878.79) $(195,878.79) OCF $(89,989.91) $(89,989.91) $(89,989.91) $(89,989.91) $(89,989.91) $(89,989.91) $(89,989.91) $(89,989.91) $(89,989.91) Total CF $(953,000.00) $(89,989.91) $(89,989.91) $(89,989.91) $(89,989.91) $(89,989.91) $(89,989.91) $(89,989.91) $(89,989.91) $(89,989.91) Tax rate 33% WACC 14% Increase 1.12 Decrease 0.88 NPV $(1,398,123.53) Question 2 T OCF Changed NWC NCS CFFA NPV WACC 0 $- $(167,232.42) $50,438.47 9% 1 $- $(83,746.18) 2 $- $(21,546.03) 3 $- $22,313.99 4 $(1,140,000.00) $(1,140,000.00) $50,438.47 5 $270,000.00 $270,000.00 6 $270,000.00 $270,000.00 7 $270,000.00 $270,000.00 8 $270,000.00 $270,000.00 9 $270,000.00 $270,000.00 10 $270,000.00 $270,000.00 Question 3 a Going directly to market now NPV $15,635,000.00 b Test marketing first NPV $15,437,500.00 Question 4 a The base-case
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