0 1 2 3 4 5 28 29 Years 30 Required Rate of Return Cost of...

Transcribed Image Text:

0 1 2 3 4 5 28 29 Years 30 Required Rate of Return Cost of the New P&E 31 Shipping and Installation 32 33 Initial Working Capital 34 Fixed Cost Inflation Rate Percentage of Working Capital 65 Annual Depreciation (calculation) 36 Sales Team Training ST 38 Year 39 Units Sold 40 Sale Price 41 Variable Cost/Unit 42 43 Sale Price - Existing 44 Additional Units Sold - Existing Variable Cost/Unit - Existing 45 Annual Fixed Cost 46 47 CASH FLOW: 48 Step L Calculate Operating Cash Flows 49 Sales Revenue 50 Less: Variable Costs 51 Sales Revenue - Exisiting 52 Variable Costs - Exisiting 53 Less: Fixed Costs 54 Less: Sales Team Training 55 Less: Depreciation 56 57 58 59 60 6T 62 63 Equals: Net operating Income Less: Taxes Equals: Net operating Profit After Taxes (NOPAT) Plus: Depreciation Equals: Operating Cash Flow Step 2: Calculate Working Capital (WC) Requirements Incremental Sales 84 Required investment in working capital 65 68 67 68 69 70 Working Capital (WC) Requirements Change Step 3: Calculate Capital Expenditure (CAPEX) Requirements Capital Expenditure (CAPEX) Requirements 71 Step 4: Calculate Free Cash Flow 72 Free Cash Flow 73 74 NPV 75 PI 76 IRR 77 Accept Project? 78 79 60 81 0 1 2 3 4 5 28 29 Years 30 Required Rate of Return Cost of the New P&E 31 Shipping and Installation 32 33 Initial Working Capital 34 Fixed Cost Inflation Rate Percentage of Working Capital 65 Annual Depreciation (calculation) 36 Sales Team Training ST 38 Year 39 Units Sold 40 Sale Price 41 Variable Cost/Unit 42 43 Sale Price - Existing 44 Additional Units Sold - Existing Variable Cost/Unit - Existing 45 Annual Fixed Cost 46 47 CASH FLOW: 48 Step L Calculate Operating Cash Flows 49 Sales Revenue 50 Less: Variable Costs 51 Sales Revenue - Exisiting 52 Variable Costs - Exisiting 53 Less: Fixed Costs 54 Less: Sales Team Training 55 Less: Depreciation 56 57 58 59 60 6T 62 63 Equals: Net operating Income Less: Taxes Equals: Net operating Profit After Taxes (NOPAT) Plus: Depreciation Equals: Operating Cash Flow Step 2: Calculate Working Capital (WC) Requirements Incremental Sales 84 Required investment in working capital 65 68 67 68 69 70 Working Capital (WC) Requirements Change Step 3: Calculate Capital Expenditure (CAPEX) Requirements Capital Expenditure (CAPEX) Requirements 71 Step 4: Calculate Free Cash Flow 72 Free Cash Flow 73 74 NPV 75 PI 76 IRR 77 Accept Project? 78 79 60 81