A review of a production project of new products has been scheduled at a furniture manufacturing company (or another company).

A bank loan of 500 thous. is required to purchase of a new production line.

Current assets must be increased by 200 thousand . In the first year operating costs in the wages of workers will increase by 200 thousand , and in subsequent years by approximately 10 thousand per year. In the first year 250 thousand will be spent on production of new products, purchase of raw materials (sawn timber, paints, furniture fittings, etc.), and the expenditure will increase annually by 25 thousand . Other annual costs will amount to 10 thousand .

In the first year the sales price will be 100 per unit of production, and it will increase by 10 every year. The planned sales of new products will reach 7500 units in the first year, in the second year the company plans to sell 8000 units, 8500 in the third, 9000 in the fourth and 7500 units in the fifth year.

The project will be financed from the companys own and borrowed capital. A bank loan of 500 thous. is required for the purchase of a new production line. The bank grants a loan for 5 years at a credit rate of 25 % per annum. Repayment of the principal amount of the loan is planned in equal installments, starting from the second year. The accepted required rate of return is 20 %, taxes and other deductions from profits 15 %.

It is necessary to calculate:

- results of investment, economic and financing activities;

- real cash flow and its balance, the balance of the accumulated real money;

- net present value NPV; - profitability index PI; - internal rate of return IRR; - payback period PP.