Do your best! 1. Learning Objectives (a) Develop proforma Project Income Statement Using Excel Spreadsheet (b) Compute Net Project Cash flows, NPV, IRR and PayBack Period $ 200,000 4% $ 120,000) 1) Life Period of the Equipment = 4 years 2) New equipment cost $ 3) Equipment ship & install cost $ 4) Related start up cost $ 5) Inventory increase $ 6) Accounts Payable increase $ 7) Equip. Salvage Value Estimated $ End of Year (fully depreciated) 8) Sales for first year (1) (200,000) 9) Sales increase per year (25,000) 10) Operating cost: (5,000) (60 Percent of Sales) 25,000 11) Depreciation (Straight Line)/YR 5,000 12) Tax rate 15,000 13) Cost of Capital (WACC) -60% $ (60,000) 35% 10% ESTIMATING Initial Outlav (Cash Flow. CFo. T=0) + Sheet1 Sheet2 Sheet3 p ESTIMATING Initial Outlay (Cash Flow, CFO, T=0) CF2 CFO 0 YEAR CF1 1 CF3 3 CF4 4 2 $ $ $ $ 200,000 25,000 5,000 230,000 20.000 5,000 $ 0 $ $ - $ $ 31 Investments: - 1) Equipment cost 2) Shipping and Install cost 3) Start up expenses Total Basis Cost (1+2+3) 4) Net Working Capital Inventory Inc.- Acct. Payable Inc. 32 Total Initial Outlay 34 35 Operations: Revenue 37 Operating cost 38 Depreciation $ $ $ 200,000 $ 208,000 $216,320 $ 224,972 120,000 $ 126,000 $132,300 $ 138,915 60.000 $ 60.000 $ 60,000 $ 60.000 Sheet1 - Sheet2 Sheet3 docs.gouye spildus ice TULUI finc_3310_final_assignment_cap_budget File Edit View Insert Format Data Tools Add-ons Help Last edit was made seconds ago by Mohammed Paracha 100% $ * . .00 123- Default (Ca... - 10 BI SA . E ... + R D E H Operating cost Depreciation EBIT Taxes @ 35% Net Income (LOSS) TAX SHIELD DUE TO LOSS Add back Depreciation $ $ $ $ $ 120,000 $ 126,000 $132,300 $ 138,915 60,000 $ 60,000 $60,000 $ 60.000 20,000 $ 22,000 $ 24.020 $ 26,057 7.000 $ 7.700 $ 8.047 $ 9.120 13,000 $ 14,300 $ 15,977 $ 16,937 $ 60,000 $ 60,000 $ 60,000 $ 60,000 Total Operating Cash Flow $ 73.000 $ 74.300 $ 75,997 $ 76,937 $ $ $ Terminal (END of 4th YEAR) 1) Release of Working Capital 2) Salvage value (after tax) Total $ 20,000 $ 9.750 $ 106,687 Project Net Cash Flows $ $ 73,000 $ 74,300 $ 75,997 $ 106,687 NPV = $61,399 8.23% Payback + Sheet1 - Sheet2 Sheet3 O