1	Income Statement						Balalnce Sheet						Cash Flow
	All numbers in thousands						All numbers in thousands						All numbers in thousands
	Revenue	12/31/2016	12/31/2015	12/31/2014			Period Ending	12/31/2016	12/31/2015	12/31/2014			Period Ending	12/31/2016	12/31/2015	12/31/2014
	Total Revenue	79,919,000	81,741,000	92,793,000			Current Assets						Net Income	11,872,000	13,190,000	12,022,000
	Cost of Revenue	41,625,000	41,057,000	46,386,000			Cash And Cash Equivalents	7,826,000	7,686,000	8,476,000			Operating Activities, Cash Flows Provided By or Used In
	Gross Profit	38,294,000	40,684,000	46,407,000			Short Term Investments	701,000	508,000	-			Depreciation	4,381,000	3,855,000	4,492,000
	Operating Expenses						Net Receivables	29,245,000	28,554,000	31,831,000			Adjustments To Net Income	-526,000	2,407,000	2,121,000
	Research Development	5,751,000	5,247,000	5,437,000			Inventory	1,553,000	1,551,000	2,103,000			Changes In Accounts Receivables	712,000	812,000	1,270,000
	Selling General and Administrative	19,438,000	19,748,000	22,438,000			Other Current Assets	4,564,000	4,205,000	4,967,000			Changes In Liabilities	251,000	59,000	-1,111,000
	Non Recurring	-	-	-			Total Current Assets	43,888,000	42,504,000	47,377,000			Changes In Inventories	-14,000	133,000	-39,000
	Others	-	-	-			Long Term Investments	13,606,000	15,200,000	16,629,000			Changes In Other Operating Activities	282,000	-3,448,000	-1,886,000
	Total Operating Expenses	-	-	-			Property Plant and Equipment	10,830,000	10,727,000	10,771,000			Total Cash Flow From Operating Activities	16,958,000	17,008,000	16,868,000
	Operating Income or Loss	13,105,000	15,689,000	18,532,000			Goodwill	36,199,000	32,021,000	30,556,000			Investing Activities, Cash Flows Provided By or Used In
	Income from Continuing Operations						Intangible Assets	4,688,000	3,487,000	3,104,000			Capital Expenditures	-3,567,000	-3,579,000	-3,740,000
	Total Other Income/Expenses Net	-145,000	724,000	1,938,000			Accumulated Amortization	-	-	-			Investments	-1,116,000	-629,000	-923,000
	Earnings Before Interest and Taxes	12,960,000	16,413,000	20,470,000			Other Assets	3,034,000	1,734,000	2,160,000			Other Cash flows from Investing Activities	-6,292,000	-3,952,000	1,662,000
	Interest Expense	630,000	468,000	484,000			Deferred Long Term Asset Charges	5,224,000	4,822,000	6,675,000			Total Cash Flows From Investing Activities	-10,976,000	-8,159,000	-3,001,000
	Income Before Tax	12,330,000	15,945,000	19,986,000			Total Assets	117,470,000	110,495,000	117,271,000			Financing Activities, Cash Flows Provided By or Used In
	Income Tax Expense	449,000	2,581,000	4,234,000			Current Liabilities						Dividends Paid	-5,256,000	-4,897,000	-4,265,000
	Minority Interest	146,000	162,000	146,000			Accounts Payable	17,726,000	16,788,000	21,973,000			Sale Purchase of Stock	-3,298,000	-4,287,000	-12,970,000
	Net Income From Continuing Ops	11,881,000	13,364,000	15,751,000			Short/Current Long Term Debt	7,513,000	6,461,000	5,731,000			Net Borrowings	2,763,000	19,000	1,783,000
	Non-recurring Events						Other Current Liabilities	11,035,000	11,021,000	11,877,000			Other Cash Flows from Financing Activities	-	-	-
	Discontinued Operations	-9,000	-174,000	-3,729,000			Total Current Liabilities	36,275,000	34,269,000	39,581,000			Total Cash Flows From Financing Activities	-5,791,000	-9,166,000	-15,452,000
	Extraordinary Items	-	-	-			Long Term Debt	34,655,000	33,428,000	34,991,000			Effect Of Exchange Rate Changes	-51,000	-473,000	-655,000
	Effect Of Accounting Changes	-	-	-			Other Liabilities	24,547,000	24,603,000	26,994,000			Change In Cash and Cash Equivalents	140,000	-790,000	-2,240,000
	Other Items	-	-	-			Deferred Long Term Liability Charges	3,600,000	3,771,000	3,691,000
	Net Income						Minority Interest	146,000	162,000	146,000
	Net Income	11,872,000	13,190,000	12,022,000			Negative Goodwill	-	-	-
	Preferred Stock And Other Adjustments	-	-	-			Total Liabilities	99,224,000	96,233,000	105,403,000

You have just been hired by Internal Business Machines Corporation (IBM) in their capital budgeting division. Your first assignment is to determine the free cash flows and NPV of a proposed new type of tablet computer similar in size to an iPad but with the operating power of a high-end desktop system. Development of the new system will initially require an initial capital expenditure equal to 10% of IBMs Property, Plant, and Equipment (PPE) at the end of fiscal year 2014. The project will then require an additional investment equal to 10% of the initial investment after the first year of the project, a 5% increase after the second year, and a 1% increase after the third, fourth, and fifth years. The product is expected to have a life of five years. First-year revenues for the new product are expected to be 3% of IBMs total revenue for the fiscal year 2014. The new products revenues are expected to grow at 15% for the second year then 10% for the third and 5% annually for the final two years of the expected life of the project. Your job is to determine the rest of the cash flows associated with this project. Your boss has indicated that the operating costs and net working capital requirements are similar to the rest of the company and that depreciation is straight-line for capital budgeting purposes. Since your boss hasnt been much help (welcome to the real world!), here are some tips to guide your analysis

1.Obtain IBMs financial statements. (If you really worked for IBM you would already have this data, but at least you wont get fired if your analysis is off target.) Download the annual income statements, balance sheets, and cash flow statements for the last four fiscal years from Yahoo! Finance (finance.yahoo.com). Enter IBMs ticker symbol and then go to financials.

2. You are now ready to estimate the Free Cash Flow for the new product. Compute the Free Cash Flow for each year using Eq. 8.5: Unlevered Net Income Free Cash Flow = (Revenues - Costs - Depreciation) * (1 - tc ) + Depreciation - CapEx - NWC

Set up the timeline and computation of free cash flow in separate, contiguous columns for each year of the project life. Be sure to make outflows negative and inflows positive. a. Assume that the projects profitability will be similar to IBMs existing projects in 2014 and estimate (revenues - costs) each year by using the 2014 EBITDA/Sales profit margin. Calculate EBITDA as EBIT + Depreciation expense from the cash flow statement. b. Determine the annual depreciation by assuming IBM depreciates these assets by the straightline method over a 5-year life. c. Determine IBMs tax rate by using the income tax rate in 2014. d. Calculate the net working capital required each year by assuming that the level of NWC will be a constant percentage of the projects sales. Use IBMs 2014 NWC/Sales to estimate the required percentage. (Use only accounts receivable, accounts payable, and inventory to measure working capital. Other components of current assets and liabilities are harder to interpret and not necessarily reflective of the projects required NWCfor example, IBMs cash holdings.) e. To determine the free cash flow, deduct the additional capital investment and the change in net working capital each year.

3. Use Excel to determine the NPV of the project with a 12% cost of capital. Also calculate the IRR of the project using Excels IRR function.

4. Perform a sensitivity analysis by varying the project forecasts as follows: a. Suppose first year sales will equal 2%4% of IBMs revenues. b. Suppose the cost of capital is 10%15%. c. Suppose revenue growth is constant after the first year at a rate of 0%10%.

need the answer in excel sheet with all formula. this is fiscal statement of 2014 not 2017

FINANCIAL STATMENT MUST BE TAKEN FROM YAHOO FINANCIAL OR ANYWHERE IN THE WEB