Ch 14 Cost-Reducing Project

Ch 14 Cost-Reducing Project - COST-REDUCING PROJECT...

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Basics (in thousands of $) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 CAGR Key Assumptions Inflation Rate 2.23% 2.60% 2.23% 1.91% 1.40% 85.66% Real Cost of Capital 8.70% 8.38% 8.08% 7.78% 7.50% 96.36% Real Growth Rate 21.30% 17.41% 14.22% 9.50% 81.72% Tax Rate 41.00% 41.00% 41.00% 41.00% 41.00% Discounting Discount Rate = Cost of Capital 11.12% 11.20% 10.48% 9.84% 9.01% Cumulative Discount Factor 0.0% 11.12% 23.57% 36.52% 49.96% 63.46% Without Investment Revenue $15,200.00 $18,916.98 $22,704.45 $26,428.95 $29,344.85 Labor Costs $4,100.00 $5,102.61 $6,124.23 $7,128.86 $7,915.39 Other Cash Expenses $5,300.00 $6,596.05 $7,916.68 $9,215.36 $10,232.09 Gross Margin $5,800.00 $7,218.32 $8,663.54 $10,084.73 $11,197.38 Depreciation $3,300.00 $3,300.00 $3,300.00 $3,300.00 $3,300.00 Pretax Profit $2,500.00 $3,918.32 $5,363.54 $6,784.73 $7,897.38 Income Taxes $1,025.00 $1,606.51 $2,199.05 $2,781.74 $3,237.93 After-tax Profit $1,475.00 $2,311.81 $3,164.49 $4,002.99 $4,659.45 Add Back Depreciation $3,300.00 $3,300.00 $3,300.00 $3,300.00 $3,300.00 Cash Flows $4,775.00 $5,611.81 $6,464.49 $7,302.99 $7,959.45 With Investment Revenue $15,200.00 $18,916.98 $22,704.45 $26,428.95 $29,344.85 Labor Costs $1,600.00 $1,991.26 $2,389.94 $2,781.99 $3,088.93 Other Cash Expenses $5,300.00 $6,596.05 $7,916.68 $9,215.36 $10,232.09 Gross Margin $8,300.00 $10,329.67 $12,397.83 $14,431.60 $16,023.83
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