Question
**Calculate Expected Cash Flows, NPV, and Present Value for opening a UPS Store Franchise** Specifically calculate the following : 1. Expected cash flows given forecasted
| **Calculate Expected Cash Flows, NPV, and Present Value for opening a UPS Store Franchise** Specifically calculate the following: 1. Expected cash flows given forecasted profit 2. Present value and net present value Discount rate is 15% | ||||||
| Particulars | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Sales Units | 10,000 | 12,000 | 14,400 | 17,280 | 20,736 | |
| Selling Price Per Unit | 20 | 20 | 20 | 20 | 20 | |
| Sales A- | 200,000 | 240,000 | 288,000 | 345,600 | 414,720 | |
| Less Variable Costs | ||||||
| Direct Materials @ 4 per unit | 40,000 | 48,000 | 57,600 | 69,120 | 82,944 | |
| Direct Labor @ 5 per unit | 50,000 | 60,000 | 72,000 | 86,400 | 103,680 | |
| Variable overheads @3 | 30,000 | 36,000 | 43,200 | 51,840 | 62,208 | |
| Total Variable cost -B | 120,000 | 144,000 | 172,800 | 207,360 | 248,832 | |
| Contribution -C = (A+B) | 80,000 | 96,000 | 115,200 | 138,240 | 165,888 | |
| Less: Fixed Costs | 100,000 | 100,000 | 100,000 | 100,000 | 100,000 | |
| Profit | -20,000 | -4,000 | 15,200 | 38,240 | 65,888 | |
| Assumptions: | ||||||
| Sales in the first year is 10,000 units | ||||||
| Selling price per unit is 20 | ||||||
| Sales increase every year by 20% | ||||||
| Direct material cost is 4 per unit | ||||||
| Direct labor cost is 5 per unit | ||||||
| Variable overhead rate per unit is 3 per unit | ||||||
| Fixed costs are 100,000 remaining the same throughout the 5 year projection | ||||||
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Finance For Housing An Introduction
Authors: Cathy Davis
1st Edition
1447306481, 978-1447306481
