ABC LTD BALANCE SHEETS AS AT 31 DECEMBER ($000) 2015 2016 2017 2018 2015 2016 2017 2018 ASSETS Current Assets Cash Account Receivable Inventory Prepaid Expense Total Current Assets 515 106 212 22 855 422 115 220 18 775 480 120 186 15 801 458 113 179 17 767 LIABILITIES Current Liabilities Bank Overdraft Account Payable Income Tax Payable Dividend Payable Total Current Liabilities 23 104 97 229 453 24 105 73 146 348 25 106 70 128 329 24 107 65 130 326 Non-current Assets Land and Building Motor Vehicles less Depreciation Plant and Equipment less Depreciation Furniture, Fixtures and Fittings less Depreciation Total Non-current Assets 658 341 670 1,669 Non-current Liabilities Bank Loans Mortgage Loans Corporate Loans Total Non-current Liabilities 658 307 670 1,635 1,310 160 (8) 480 (22) 150 (15) 2,055 658 292 670 1,620 1,310 160 (24) 571 (69) 155 (25) 2,078 658 260 670 1,588 8 w 1,310 160 (40) 599 (125) 160 (35) 2,029 1,310 160 (56) 683 (185) 165 (45) 2,032 TOTAL LIABILITIES 2,122 1,983 1,949 1,914 SHAREHOLDERS' EQUITY Ordinary Shares Preference Shares Retained Earnings Total Shareholders' Equity 502 175 111 788 502 175 193 870 502 175 204 881 502 175 208 885 TOTAL ASSETS 2,910 2,853 2,830 2,799 TOTAL LIABILITIES AND SHAREHOLDERS'EQUITY 2,910 2,853 2,830 2,799 ABC Financial Statements Instruction cost of Capital Capital Budgeting Discounted Paybacl ... + M o Q U V G H ABC LTD PROFIT AND LOSS STATEMENTS FOR THE YEARS ENDING 31 DECEMBER ($000) ABC LTD STATEMENTS OF CASHFLOWS FOR THE YEARS ENDING 31 DECEMBER ($000) 2016 2017 2018 Sales Cost of Good Sold (Cost of Sales) Gross Profit Wages Rent Motovehicle running expenses Heating and Lighting Telephone, postage and Internet Depreciation Total Total Operating Expenses Operating Profit (EBIT) Into Interest Profit Before Tax Tax (30%) 2016 2,191 (1,306) 885 (308) 2001 (89) (35) 1 We (28) (46) (73) ZO (579) 2018 306 (73) 233 (70) 163 2017 2.100 (1,332) 768 (302) (89) (37) (25) (42) (82) (577) 04 191 (71) 120 (36) 84 2,166 (1,045) (847) (108) (81) (18) 67 2,293 (1,000) (747) (105) (70) (15) 356 2,054 (890) (827) (103) (36) (17) 181 2018 2,376 CASHFLOWS FROM OPERATING ACTIVITIES (1,371) Cash received from customers 1,005 Cash paid to suppliers (399) Cash expenses Took (89) Interest paid (39) Tax paid el (26) Prendid Prepaid expenses XX IM (41) be Net cash provided by operating activities (86) CASHFLOWS FROM INVESTING ACTIVITIES (680) Plent and can Plant and Equipment 325 Irit Furniture, Fixtures and Fittings 120 (70) Net cash provided by investing activities 255 CA SUCI WS CASHFLOWS FROM FINANCING ACTIVITIES (77) Bank Overdraft 179 Mortgage Loan Repayments To Buyback of Shares Dividend Paid 90 cash provided by financing activities 20 Net increase in cash 110 Opening Cash Closing Cash Capital Budgeting Discounted Paybacl ... # 7 (44) 5 (39) 28 5 33 (24) 5 (19) Net Profit (1) (37) (1) (34) (2) (30) Net caer Ordinary Dividend Paid Preference Dividend Paid Dividend Paid 85 20 105 84 20 104 (83) (121) (93) 515 422 (85) (120) 269 422 480 (84) (116) 46 480 458 ABC Financial Statements Instruction Cost of Capital E F H N o P Q R s U 2,191 (1,306) M CASHFLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash paid to suppliers Cash expenses Interest paid 2,054 (890) (827) D Sales Cost of Good Sold (Cost of Sales) Gross Profit Wages Rent Motovehicle running expenses To postage and Internet and Lighting Depreciation Total Operating Expenses Operating Profit (EBIT) Interest Profit Before Tax Tax (30%) Net Profit 2,293 (1,000) (747) (105) 2,376 (1,371) 1,005 (399) (89) (89) 139) (39) 1261 (20) mi (41) gal (86) TJ 2,100 (1,332) 768 (302) (89) (89) (37) 1373 (25) (25) mo (42) 1821 (82) (577) (577) 191 191 (71) 120 (36) 84 2,166 (1,045) (847) (108) (81) (18) 67 885 (308) (89) (89) 135) (35) 128) (28) ( (46) 1733 (13) (579) (579) 306 (731 (13) 233 (70) 163 Tax paid Prepaid (103) (36) (17) 181 (680) (44) 5 (39) (24) 5 (19) 325 (70) 255 (77) 179 expenses Net cash provided by operating activities CASHFLOWS FROM INVESTING ACTIVITIES Plant and Equipment Furniture, Fixtures and Fittings , Net cash provided by investing activities CASHFLOWS FROM FINANCING ACTIVITIES Mortgage Loan Repayments Buyback Dividend Paid Net cash provided by financing activities Net increase in cash + Opening Cash = Closing Cash Bank Overdraft of Shares (1) (37) (2) (30) (83) (84) (121) (120) Ordinary Dividend Paid Preference Dividend Paid Dividend Paid (116) 85 20 105 84 20 104 90 20 1101 gug Eg. 9 (93) 515 422 46 480 458 Purchases 1,029 1,173 1,036 Ordinary Share price ($) Number of Ordinary Share thousand) 2.05 245 2.32 245 All purchases and sales are on credit Preference Share price ($) Number of Preference Share thousand) 1.32 195 1.36 195 ABC Financial Statements Instruction Cost of Capital Capital Budgeting Discounted Paybacl ... + 1 It is now Feb 2019. ABC Ltd has identified few potential projects that the firm could undertake, but is not sure how to determine the best projects to go ahead with. You have explained to your client that the first task to do is to figure out the firm's Weighted Average cost of Capital (WACC), as it is the minimum return required on new projects in order to meet the cost of capital and increase the value of the firm. Based on the most recent financial data in 2018 which has been provided in Assignment 2, you will help the firm to calculate its WACC based on the sources of capital shown in the 2018 Balance Sheet. You need to complete the following tasks in Cost of Capital tab. 1. Determine the cost of all sources of capital (i.e. all non-current liabilities, ordinary shares, preference shares) - Note that Retained Earnings are not included, since all reserves, including retained earnings, belong to the owners of ordinary shares, and market value of ordinary shares has included the value of these reserves). 2. Determine the market value of all sources of capital (excluding Retained Earnings). 3. Calculate the firm's WACC. The interest rate on Bank Loan is 8.0%, and interest rate on the Mortgage Loan is 11.0%. Market value of Bank Loan and Mortgage Loan can be presumed to be the values in the 2018 Balance Sheet. The corporate bond issued by the firm is rated A+ and require 165bsp above the 5-year Government Securities rate of 3.5%. This bond is paying 6% coupon on annual basis and have 10 years to maturity. The ordinary shares have a beta of 1.4, the risk-free rate applies for the CAPM to identify cost of equity is the 10-year Government Securities rate of 5.4%. Market Risk Premium is 4%. The preference shares pay a fixed annual dividend of 10 cents per share. After identifying the WACC, the firm is considering about two projects. You will be in the position to recommend the acceptance or rejection of the project to your client. The project in question involves the acquisition of a new machine which will help the firm to increase its productivity of children toys. The firm has analysed the project and provided the following information, as shown below. You need to complete the following tasks in Capital Budgeting tab. 1. Determine the incremental free cashflows if they would be accepted. 2. Calculate the NPV of the incremental free cashflows. 3. Provide the firm with your recommendation to accept or reject the project ABC Financial Statements Instruction Cost of Capital Capital Budgeting Discounted Paybac + The preference shares pay a fixed annual dividend of 10 cents per share. After identifying the WACC, the firm is considering about two projects. You will be in the position to recommend the acceptance or rejection of the project to your client. The project in question involves the acquisition of a new machine which will help the firm to increase its productivity of children toys. The firm has analysed the project and provided the following information, as shown below. You need to complete the following tasks in Capital Budgeting tab. 1. Determine the incremental free cashflows if they would be accepted. 2. Calculate the NPV of the incremental free cashflows. 3. Provide the firm with your recommendation to accept or reject the project. Following is the project's information (all values are in thousands of dollars). A feasibility study has been performed at the cost of $25, which has generated the following data. The machine will have a useful life of 5 years, will cost $400 to purchase and install. This cost will be depreciated over the life of the project to a book value of zero using diminishing value depreciation. The machine is expected to have a salvage value of $50, which will be received at the end of Year 5. The project will require an increase in Net working capital of $10, which will be also recouped at the end of Year 5. The new machine will generate an increased revenue of $150 in the first year of operation, $180 in the second and third year, and $140 in Year 4 and Year 5. Use of the new machine will require an extra wage payment of $35 per year, extra maintenance costs of $9 per year. The machine will be installed in a building that has been already owned by the firm. If the project does not go ahead, this building could be rented out for $15 per year. ABC Financial Statements Instruction Cost of Capital Capital Budgeting Discounted Paybacl ... + E J K L M N o B C D F G H Note: All dollar values (except share prices) are to be entered as $000s. SOURCES OF CAPITAL COST VALUE WEIGHT Bank Loans Before-tax cost of bank loans Market value of bank loans (5000) Mortgage Loans Before-tax cost of mortgage loans Market value of mortgage loans ($000) II Corporate Bonds Before-tax cost of corporate bonds Face value of all bonds ($000) Coupon rate Market Value of corporate bonds (5000) Ordinary Shares Beta Risk free rate Market risk premium Cost of ordinary shares Market value of ordinary shares Preference shares Preference dividend per share Preference share price Cost of preference shares | ABC Financial Statements Instruction Cost of Capital Capital Budgeting Discounted Paybacl ... + Market value of mortgage loans ($000) Corporate Bonds Before-tax cost of corporate bonds Face value of all bonds (5000) Coupon rate Market Value of corporate bonds ($000) Ordinary Shares Beta Risk free rate Market risk premium Cost of ordinary shares Market value of ordinary shares Preference shares Preference dividend per share Preference share price Cost of preference shares Market value of preference shares Total Tax rate Weighted Average Cost of Capital ABC Financial Statements Instruction Cost of Capital Capital Budgeting Discounted Paybacl ... + Note All values are in thousand dollars All expenses and cash outflows are to be entered as negative numbers 1 The description fields on this tab should be entered similarly to the descriptions in the following list. All expenses should be entered using negative values. You need to fill in all the blank cells with their corresponding values. 2 3 4 Weighted Avergage Cost of Capital 5 Depreciation Calculation Year Opening Book Value less Depreciation Closing Book Value Tax Rate 0 1 2 3 4 5 5 0 1 2 3 4 5 Initial Cashflow Initial Outlay Net working Capital Total Initial Cashflow Operating Cashlow Revenue less Wages less Maintenance less Depreciation less Opportunity Cost (Rent) EBIT (Revenue-Costs-Depreciation) less Tax Earnings (After Tax Profit) = EBIT(1-Tax Rate) plus Depreciation Total Operating Cashflow Terminal Cashlow Salvage Value less Tax on Profit on Sale of Asset Net Working Capital ABC Financial Statements Instruction less Feasibility Study Initial Outlay Net Working Capital Revenue less Wages less Maintenance less Depreciation less Opportunity Cost (Rent) less Tax plus Depreciation Salvage Value less Tax on Profit on Sale of Asset Net Working Capital Cost of Capital Capital Budgeting Discounted Paybacl ... + 0 1 2 3 4 5 0 1 2 2. 3 4 5 Initial Cashflow Initial Outlay Net working Capital Total Initial Cashflow Operating Cashlow Revenue less Wages less Maintenance less Depreciation less Opportunity Cost (Rent) EBIT (Revenue-Costs-Depreciation) less Tax Earnings (After Tax Profit) = EBIT(1-Tax Rate) (1 plus Depreciation Total Operating Cashflow Terminal Cashlow Salvage Value less Tax on Profit on Sale of Asset A Net Working Capital Total Terminal Cashflow Incremental Free Cashflows PV of Incremental Free Cashflows NPV less Feasibility Study Initial Outlay Net Working Capital Revenue less Wages less Maintenance less Depreciation less Opportunity Cost (Rent) less Tax plus Depreciation Salvage Value less Tax on Profit on Sale of Asset Net Working Capital EBIT (Revenue-Costs-Depreciation) ABC Financial Statements Instruction Cost of Capital Capital Budgeting Discounted Paybacl ... + ABC LTD BALANCE SHEETS AS AT 31 DECEMBER ($000) 2015 2016 2017 2018 2015 2016 2017 2018 ASSETS Current Assets Cash Account Receivable Inventory Prepaid Expense Total Current Assets 515 106 212 22 855 422 115 220 18 775 480 120 186 15 801 458 113 179 17 767 LIABILITIES Current Liabilities Bank Overdraft Account Payable Income Tax Payable Dividend Payable Total Current Liabilities 23 104 97 229 453 24 105 73 146 348 25 106 70 128 329 24 107 65 130 326 Non-current Assets Land and Building Motor Vehicles less Depreciation Plant and Equipment less Depreciation Furniture, Fixtures and Fittings less Depreciation Total Non-current Assets 658 341 670 1,669 Non-current Liabilities Bank Loans Mortgage Loans Corporate Loans Total Non-current Liabilities 658 307 670 1,635 1,310 160 (8) 480 (22) 150 (15) 2,055 658 292 670 1,620 1,310 160 (24) 571 (69) 155 (25) 2,078 658 260 670 1,588 8 w 1,310 160 (40) 599 (125) 160 (35) 2,029 1,310 160 (56) 683 (185) 165 (45) 2,032 TOTAL LIABILITIES 2,122 1,983 1,949 1,914 SHAREHOLDERS' EQUITY Ordinary Shares Preference Shares Retained Earnings Total Shareholders' Equity 502 175 111 788 502 175 193 870 502 175 204 881 502 175 208 885 TOTAL ASSETS 2,910 2,853 2,830 2,799 TOTAL LIABILITIES AND SHAREHOLDERS'EQUITY 2,910 2,853 2,830 2,799 ABC Financial Statements Instruction cost of Capital Capital Budgeting Discounted Paybacl ... + M o Q U V G H ABC LTD PROFIT AND LOSS STATEMENTS FOR THE YEARS ENDING 31 DECEMBER ($000) ABC LTD STATEMENTS OF CASHFLOWS FOR THE YEARS ENDING 31 DECEMBER ($000) 2016 2017 2018 Sales Cost of Good Sold (Cost of Sales) Gross Profit Wages Rent Motovehicle running expenses Heating and Lighting Telephone, postage and Internet Depreciation Total Total Operating Expenses Operating Profit (EBIT) Into Interest Profit Before Tax Tax (30%) 2016 2,191 (1,306) 885 (308) 2001 (89) (35) 1 We (28) (46) (73) ZO (579) 2018 306 (73) 233 (70) 163 2017 2.100 (1,332) 768 (302) (89) (37) (25) (42) (82) (577) 04 191 (71) 120 (36) 84 2,166 (1,045) (847) (108) (81) (18) 67 2,293 (1,000) (747) (105) (70) (15) 356 2,054 (890) (827) (103) (36) (17) 181 2018 2,376 CASHFLOWS FROM OPERATING ACTIVITIES (1,371) Cash received from customers 1,005 Cash paid to suppliers (399) Cash expenses Took (89) Interest paid (39) Tax paid el (26) Prendid Prepaid expenses XX IM (41) be Net cash provided by operating activities (86) CASHFLOWS FROM INVESTING ACTIVITIES (680) Plent and can Plant and Equipment 325 Irit Furniture, Fixtures and Fittings 120 (70) Net cash provided by investing activities 255 CA SUCI WS CASHFLOWS FROM FINANCING ACTIVITIES (77) Bank Overdraft 179 Mortgage Loan Repayments To Buyback of Shares Dividend Paid 90 cash provided by financing activities 20 Net increase in cash 110 Opening Cash Closing Cash Capital Budgeting Discounted Paybacl ... # 7 (44) 5 (39) 28 5 33 (24) 5 (19) Net Profit (1) (37) (1) (34) (2) (30) Net caer Ordinary Dividend Paid Preference Dividend Paid Dividend Paid 85 20 105 84 20 104 (83) (121) (93) 515 422 (85) (120) 269 422 480 (84) (116) 46 480 458 ABC Financial Statements Instruction Cost of Capital E F H N o P Q R s U 2,191 (1,306) M CASHFLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash paid to suppliers Cash expenses Interest paid 2,054 (890) (827) D Sales Cost of Good Sold (Cost of Sales) Gross Profit Wages Rent Motovehicle running expenses To postage and Internet and Lighting Depreciation Total Operating Expenses Operating Profit (EBIT) Interest Profit Before Tax Tax (30%) Net Profit 2,293 (1,000) (747) (105) 2,376 (1,371) 1,005 (399) (89) (89) 139) (39) 1261 (20) mi (41) gal (86) TJ 2,100 (1,332) 768 (302) (89) (89) (37) 1373 (25) (25) mo (42) 1821 (82) (577) (577) 191 191 (71) 120 (36) 84 2,166 (1,045) (847) (108) (81) (18) 67 885 (308) (89) (89) 135) (35) 128) (28) ( (46) 1733 (13) (579) (579) 306 (731 (13) 233 (70) 163 Tax paid Prepaid (103) (36) (17) 181 (680) (44) 5 (39) (24) 5 (19) 325 (70) 255 (77) 179 expenses Net cash provided by operating activities CASHFLOWS FROM INVESTING ACTIVITIES Plant and Equipment Furniture, Fixtures and Fittings , Net cash provided by investing activities CASHFLOWS FROM FINANCING ACTIVITIES Mortgage Loan Repayments Buyback Dividend Paid Net cash provided by financing activities Net increase in cash + Opening Cash = Closing Cash Bank Overdraft of Shares (1) (37) (2) (30) (83) (84) (121) (120) Ordinary Dividend Paid Preference Dividend Paid Dividend Paid (116) 85 20 105 84 20 104 90 20 1101 gug Eg. 9 (93) 515 422 46 480 458 Purchases 1,029 1,173 1,036 Ordinary Share price ($) Number of Ordinary Share thousand) 2.05 245 2.32 245 All purchases and sales are on credit Preference Share price ($) Number of Preference Share thousand) 1.32 195 1.36 195 ABC Financial Statements Instruction Cost of Capital Capital Budgeting Discounted Paybacl ... + 1 It is now Feb 2019. ABC Ltd has identified few potential projects that the firm could undertake, but is not sure how to determine the best projects to go ahead with. You have explained to your client that the first task to do is to figure out the firm's Weighted Average cost of Capital (WACC), as it is the minimum return required on new projects in order to meet the cost of capital and increase the value of the firm. Based on the most recent financial data in 2018 which has been provided in Assignment 2, you will help the firm to calculate its WACC based on the sources of capital shown in the 2018 Balance Sheet. You need to complete the following tasks in Cost of Capital tab. 1. Determine the cost of all sources of capital (i.e. all non-current liabilities, ordinary shares, preference shares) - Note that Retained Earnings are not included, since all reserves, including retained earnings, belong to the owners of ordinary shares, and market value of ordinary shares has included the value of these reserves). 2. Determine the market value of all sources of capital (excluding Retained Earnings). 3. Calculate the firm's WACC. The interest rate on Bank Loan is 8.0%, and interest rate on the Mortgage Loan is 11.0%. Market value of Bank Loan and Mortgage Loan can be presumed to be the values in the 2018 Balance Sheet. The corporate bond issued by the firm is rated A+ and require 165bsp above the 5-year Government Securities rate of 3.5%. This bond is paying 6% coupon on annual basis and have 10 years to maturity. The ordinary shares have a beta of 1.4, the risk-free rate applies for the CAPM to identify cost of equity is the 10-year Government Securities rate of 5.4%. Market Risk Premium is 4%. The preference shares pay a fixed annual dividend of 10 cents per share. After identifying the WACC, the firm is considering about two projects. You will be in the position to recommend the acceptance or rejection of the project to your client. The project in question involves the acquisition of a new machine which will help the firm to increase its productivity of children toys. The firm has analysed the project and provided the following information, as shown below. You need to complete the following tasks in Capital Budgeting tab. 1. Determine the incremental free cashflows if they would be accepted. 2. Calculate the NPV of the incremental free cashflows. 3. Provide the firm with your recommendation to accept or reject the project ABC Financial Statements Instruction Cost of Capital Capital Budgeting Discounted Paybac + The preference shares pay a fixed annual dividend of 10 cents per share. After identifying the WACC, the firm is considering about two projects. You will be in the position to recommend the acceptance or rejection of the project to your client. The project in question involves the acquisition of a new machine which will help the firm to increase its productivity of children toys. The firm has analysed the project and provided the following information, as shown below. You need to complete the following tasks in Capital Budgeting tab. 1. Determine the incremental free cashflows if they would be accepted. 2. Calculate the NPV of the incremental free cashflows. 3. Provide the firm with your recommendation to accept or reject the project. Following is the project's information (all values are in thousands of dollars). A feasibility study has been performed at the cost of $25, which has generated the following data. The machine will have a useful life of 5 years, will cost $400 to purchase and install. This cost will be depreciated over the life of the project to a book value of zero using diminishing value depreciation. The machine is expected to have a salvage value of $50, which will be received at the end of Year 5. The project will require an increase in Net working capital of $10, which will be also recouped at the end of Year 5. The new machine will generate an increased revenue of $150 in the first year of operation, $180 in the second and third year, and $140 in Year 4 and Year 5. Use of the new machine will require an extra wage payment of $35 per year, extra maintenance costs of $9 per year. The machine will be installed in a building that has been already owned by the firm. If the project does not go ahead, this building could be rented out for $15 per year. ABC Financial Statements Instruction Cost of Capital Capital Budgeting Discounted Paybacl ... + E J K L M N o B C D F G H Note: All dollar values (except share prices) are to be entered as $000s. SOURCES OF CAPITAL COST VALUE WEIGHT Bank Loans Before-tax cost of bank loans Market value of bank loans (5000) Mortgage Loans Before-tax cost of mortgage loans Market value of mortgage loans ($000) II Corporate Bonds Before-tax cost of corporate bonds Face value of all bonds ($000) Coupon rate Market Value of corporate bonds (5000) Ordinary Shares Beta Risk free rate Market risk premium Cost of ordinary shares Market value of ordinary shares Preference shares Preference dividend per share Preference share price Cost of preference shares | ABC Financial Statements Instruction Cost of Capital Capital Budgeting Discounted Paybacl ... + Market value of mortgage loans ($000) Corporate Bonds Before-tax cost of corporate bonds Face value of all bonds (5000) Coupon rate Market Value of corporate bonds ($000) Ordinary Shares Beta Risk free rate Market risk premium Cost of ordinary shares Market value of ordinary shares Preference shares Preference dividend per share Preference share price Cost of preference shares Market value of preference shares Total Tax rate Weighted Average Cost of Capital ABC Financial Statements Instruction Cost of Capital Capital Budgeting Discounted Paybacl ... + Note All values are in thousand dollars All expenses and cash outflows are to be entered as negative numbers 1 The description fields on this tab should be entered similarly to the descriptions in the following list. All expenses should be entered using negative values. You need to fill in all the blank cells with their corresponding values. 2 3 4 Weighted Avergage Cost of Capital 5 Depreciation Calculation Year Opening Book Value less Depreciation Closing Book Value Tax Rate 0 1 2 3 4 5 5 0 1 2 3 4 5 Initial Cashflow Initial Outlay Net working Capital Total Initial Cashflow Operating Cashlow Revenue less Wages less Maintenance less Depreciation less Opportunity Cost (Rent) EBIT (Revenue-Costs-Depreciation) less Tax Earnings (After Tax Profit) = EBIT(1-Tax Rate) plus Depreciation Total Operating Cashflow Terminal Cashlow Salvage Value less Tax on Profit on Sale of Asset Net Working Capital ABC Financial Statements Instruction less Feasibility Study Initial Outlay Net Working Capital Revenue less Wages less Maintenance less Depreciation less Opportunity Cost (Rent) less Tax plus Depreciation Salvage Value less Tax on Profit on Sale of Asset Net Working Capital Cost of Capital Capital Budgeting Discounted Paybacl ... + 0 1 2 3 4 5 0 1 2 2. 3 4 5 Initial Cashflow Initial Outlay Net working Capital Total Initial Cashflow Operating Cashlow Revenue less Wages less Maintenance less Depreciation less Opportunity Cost (Rent) EBIT (Revenue-Costs-Depreciation) less Tax Earnings (After Tax Profit) = EBIT(1-Tax Rate) (1 plus Depreciation Total Operating Cashflow Terminal Cashlow Salvage Value less Tax on Profit on Sale of Asset A Net Working Capital Total Terminal Cashflow Incremental Free Cashflows PV of Incremental Free Cashflows NPV less Feasibility Study Initial Outlay Net Working Capital Revenue less Wages less Maintenance less Depreciation less Opportunity Cost (Rent) less Tax plus Depreciation Salvage Value less Tax on Profit on Sale of Asset Net Working Capital EBIT (Revenue-Costs-Depreciation) ABC Financial Statements Instruction Cost of Capital Capital Budgeting Discounted Paybacl ... +
