Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelly Couts, who inherited the company. The company originally repaired radios and other household appliances when it was founded over 70 years ago. Over the years, the company has expanded, and it is now a reputable manufacturer of various specialty electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company in its finance department. One of the major revenue-producing items manufactured by Conch Republic is a smart phone. Conch Republic currently has one smart phone model on the market and sales have been excellent. The smart phone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smart phone has limited features in comparison with newer models. Conch Republic spent $300,000 to develop a prototype for a new smart phone that has all the features of the excisting one but adds new features such as wifi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smart phone. Conch Republic can manufacture the new smart phone for $190 each in variable costs. Fixed costs for the operation are estimated to run $2.5 million per year. The estimated sales volume is 73,000, 85,000, 91,000, 87,000, and 50,000 per year for the next five years, respectively. The unit price of the new smart phone will be $360. The necessary equipment can be purchased for $13.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be 1.2 million. Net working capital for the smart phones will be 11 percent of next year sales. Conch Republic has a 33 percent corporate tax rate and a required return of 11 percent. Shelly has asked Jay to prepare a report that answers the following questions : Questions 1. What is the payback period of the project? 2. What is the profitability index of the project? 3. What is the IRR of the project? 4. What is the NPV of the project? 5. Perform a sensitivity analysis for the price of the new smart phone. Mensure the effects on NPV by moving price 5% up and down. 6. Perform a sensitivity analysis for the quantity of phones sold. Measure the effects on NPV by moving quantity 5% up and down. 7. Should Conch Republic produce the new smart phone? 8. Suppose Conch Republic lose sales or other models because of the introduction of the new model. How would this affect your analysis? 0 Majestic Mulch and compost Company (MCC) YEAR M 4 6 2,000 3.000 L000 8.500 . 5.000 4000 2.000 80.00 25,000.00 120.00 3409 15.00 20.000.00 $ 120.00 $ 12000$ 10.00! 11000 0.00 110.00 S 5 Background Data Unt Sales Variable Costne Fred Costs per 9 Sale Price per un 50 Tax Rate 11 Required Retumen Project 12 YONWC 13 WWC of sales Equipment contin 15 Salvage Voyeur 10 17 Depreciation Collins Essentials MACRST Recowy Allen Book Value 110.00 BOL.000 of aquiment cost 200.000 1429 11020 SAS 24 TO 11 30,00 140 12401 98 920 243.320 22 TO 44 71,440 SOF 120 3560 20% 150,000 AerTo Save Value Salvage Value Bulee Year Caption Ta HOV.To 5400 105.000 30 Roured Net Wong Content 2222 YEAR intment woment Cow od 000 500 000 200.000 2.000 720.00 0000 Varios Fio Costs Depreciation 8.000 . 30.000 25,00 220 9.00 100,000 25.000 550.000 300.000 21.000 TI 40,000 74.000 21.000 330.000 100 2.00 1212 TO 25.000 H00 19.00 13 01 20 14220 1 34000 ME 2199 1980 IM 181.300 30 RO 7144 TA Nel Operating Add back Deprecat CASH FLOW Brown NWC & Recovery Savage Value TOTAL PROXECTO CE 12920 CALCON 112 16.00 TO 1 . . counted Cat crocon 110 164 CumCustom TRO 100 SEM 11 IN SON 05. WER MMOC Song sity + 0 Scenatio Analysis $ Units Price/unit Variable cost/unit Fixed cost year Base 6,000 80.00 $ 60.00 $ 50,000 $ Lower 5,500 75.00 $ 58.00 $ 45,000 Upper 6,500 85,00 62.00 55,000 $ 3 BASE BEST WORST 10 11 12 13 10 15 36 17 18 19 20 Initial Investment $ 200,000 Depreciated to salvage value of 0 over 5 years Deprecyr $ 40.000 Project Life 5 years Tax rate 34% Required return 12% Units Price/unit Variable cost/unit Fixed Cost $ $ $ BASE 6,000 80.00 $ 60.00 $ 50,000 $ WORST 5,500 75.00 62.00 $ $5,000 $ BEST 6.500 85.00 58.00 45,000 INNRRN $ Sales Variable Cost Fixed Cost Depreciation EBIT Taxes Net Income Deprec 480,000 $ 360,000 50,000 40,000 30,000 10,200 19.500 40,000 412.500 5 341,000 55,000 40,000 (23,500) (7.990) (15.510) 40.000 552,500 377.000 45,000 40,000 90,500 30.770 59,730 40,000 TOTAL CF 59.800 24.490 99,730 RESERRE NPV 15.565 [111.719) 159,504 IRR 1515 40.9% 40 NOTE Note in WORST CASE, tax credit for negative earnings 45 $ 200.000 200.000 5200,000) 52.600 99,730 9.300 99,730 52,800 32.730 2.800 2441 98.730 S. 24.40 99,730 PV NPV MMCC 15,665 Scenario 231 $159.504 1111.11 Senty + Sensitivity Analysis COM Uni 6,000 4.000 Units Print Variable cost Fred content 40 50,000 50,000 55.000 Initial restent 200.000 Depreciated to salvage value of over 5 years Deprecy 13 15 Tax rate Required Return 34% 12% 12 BASE 6.000 105 FC C.000 Units Price unit Variable costunit Fixed cost UNITS 5.500 B05 003 50.000 5 24 0.0005 SD 24 Sales Variable Cost Pred Cost Depreciation EBIT Taxes Net Income Deprec 450.000 5 360,000 50.000 40 000 30,000 10 200 19 500 40.000 440.000 330.000 50,000 40.000 20.000 5900 13.200 40,000 10.000 300.000 55.000 40.000 25.000 3.500 16.500 40.000 TOTAL CF 59.000 53.200 5.500 NPV 522615 152.0 Change in NPV Change in Variable 100 SENSITIVITY RATIO 11 DIRECT INVERSE Sensitivity Rate Change in PVChange in Varia Positive Direction Negative inverse relations 200.000 99.000 100 59.500 5.50 59.000 200.000 33.200 53200 53.200 53.200 53200 200.000 54.500 54500 SE 500 S 500 300 PV 191.22413 15 5 MMCC Scenario Sensitivity Ready Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelly Couts, who inherited the company. The company originally repaired radios and other household appliances when it was founded over 10 years ago. Over the years, the company has expanded, and it is now & reputable manufacturer of various specialty electronie items. Jay McCanless, a recent MBA graduate, has been hired by the company in its finance department. One of the major revenue-producing items manufactured by Conch Republic is a smart phone. Conch Republic currently has one smart phone model on the market and sales have been eccellent. The smart phone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smart phone has limited features in comparison with newer models. Conch Republic spent $300,000 to develop a prototype for a new smart phone that has all the features of the existing one bat adds new features such as wifi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smart phone Conch Republic can manufacture the new smart phone for $180 each in variable costs. Fixed costs for the operation are estimated to run $2.5 million per year. The estimated sales volume is 73,000, 85,000, 91,000, 87,000, and 50,000 per year for the next five years, respectively. The unit price of the new smart phone will be $360. The necessary equipment can be purchased for $13.5 million and will be deprecinted on a seven-yenr MACRS schedule. It is believed the value of the equipment in five years will be 1.2 million, Net working capital for the smartphones will be 11 percent of next year sales. Conch Republic hins n 33 percent corporate tax rate and a required return of 11 percent. Shelly hans naked Jay to prepare a report that answers the following questions Questions 1. What is the payback period of the project? 2. What is the profitability index of the project? 3. What is the IRR of the project? 4. What is the NPV of the project? 5. Perform a serbitivity analynis for the price of the new unit phone. Mentire the effects on NPV by moving price up and down. 6. Perform a sitivity analysis for the qunntity of phone sold. Mentre tho effects on NIV by moving quantity 5% up and down 7. Should Conch Republic produce the new snart phone? 8. Suppo Conch Republic loses sales on other models because of the introduction of the new model. How would this afect your ball? port ANN 10 29 General Delete Date BIU OA IMU S% Conditional Format Cell Formatting as Tablo Style Forma Office Update To keep upto-date with security updates, foxes and improvements, choose Check for Updates. 013 x x E G M N 1 2 3 41 7 3,000 5,000 6.000 8,500 6,000 5,000 4,000 3,000 120.005 120.000 120.00 110,00 S 110.00 $ 110.00 110.000 110.00 A 0 D Majestic Mulch and compost Company (MMCC) 2 3 YEAR 0 4 8 Background Data 0 Unit Sales Eamate 7 Variable Coat 60.00 Fixed Cori per year 25.000.00 Sale Price per unit 120.00 1 10 Tax Rate 34.0N 1 Required Return on Pro 15.0% 12 YONWG 320,000.00 13 NWC of sales 15% 14 Equipment cost installed $ 800,000 15 Salvage Value in year 2010. fequipment com to 17 Depreciation Calculation 18 lopment Depreciable Base 890,000 10 MACRS plyn 20 Recovery Allowance Book Value 14.25 114 320 845,680 24 495 195.920 489.760 17.49% 39020 340,000 12.495 99.320 249.90 8.92% 71,360 178,560 335 71.440 107, 120 8.93% 11.440 35.400 4.46% 35,600 o 20% 160,000 0 160.000 54400 105.400 23. Anar Tax Salvage Value Salvage Value Book Vrear) Capital Gallo Taxes 28 MSV (BV. TRO) 20 20 Required Working Capital Invest 21 32 02 YEAR Inwest 33 Bont Cout S Variable MMOO Scenario 20.000 00.000 100.000 101210 99 000 82.500 66000 49 400 0.0001 380.000 600.000 2.900 720,000 380,490 715,000 310,000 80.006 140.000 380,000 300.000 330.000 449.000 240.000 100.000 Bensivity - Arial 10 General General lol lol Pte 8 IU $ % ) Conditional Format Cell Formatting as Table Styles Omico Update To koop up to date with security updates, fixes, and improvements, choose Check for Updates. 013 0 C o E F 0 H M 20% 23 Aner.Tax Salvage Value 24 Salvage Value 20 Book Value (Year) 20 Capital Gaint. 27 Taxes 20 Net BV (V Taxes) 160,000 0 160,000 54 400 105,600 20,000 54.000 90,000 10.000 107 250 99,000 82.800 66,000 49.500 100,000) 30 Required Net Working Capital weatment 31 32 33 YEAR 34 this restent 35 Equipment Cost 30 Sales 37 Variable costs 30 Fixed Costa 30 Depreciation (po 40 EBT 41 Taxes 42 Net Operating income 43 Adid Back Depreciation 44 CASH FLOW from Operations 45 ww investment & Recovery 46 Salvage Value 47 TOTAL PROJECTED CF 40 49 Discounted Cash Flows 90 01 Cumulative Cashflows 360,000 180,000 25,000 114 120 40.680 13031 26,349 114120 141,109 4,000) 600,000 300.000 25.000 103 020 79,080 26. BET 52,193 195.920 248,113 30,000) 720,000 360,000 25,000 139.920 195.000 66327 128,753 715,000 390,000 25,000 99,920 200,000 68,027 132.053 98.220 231973 750 660,000 360,000 25,000 71360 203,640 69.230 134.402 71 360 205.762 8.250 550,000 300,000 25.000 71.440 153.560 52 210 101 350 71 440 17200 16,500 440,000 240,000 25,000 71.440 103.560 25 210 60,350 71.440 139,790 16,500 330,000 180,000 25,000 35.680 19 320 30,367 58,951 35.6.80 94,631 66,000 to 600 206,231 (20,000 266,073 (18.00) 120.000) TOTA109 212113 250.51 232.122 214,012 15200 1920,000) 160,388 164821 133.000 108.402 01.035 93.190 (712,031 58755 87,031 (320,000) 100.718) 250,040 (17.32) 135,000 385.979 542.269 106,500 NPV IRR 83 34 65 10 57 17.24% 4.08 AMCC teeralio Sensitivity Office Update To keep up-todate with security updates, focos, an 021 x & fel 1 Scenario Analysis B G 2 3 4 5 6 7 Units Price/unit Variable cost/unit Fixed costlyear Base 6,000 80.00 $ 60.00 $ 50,000 $ Lower 5,500 75.00 $ 58.00 $ 45,000 $ Upper 6,500 85.00 62.00 55,000 $ 8 9 BASE BEST WORST Initial Investment $ 200,000 Depreciated to salvage value of 0 over 5 years Deprec/yr 40,000 Project Lite Tax rate 34% Required return 12% 5 years 10 11 12 13 14 15 16 17 19 19 20 21 22 23 20 25 Units Price/unit Variable cost/unit Fixed Cost $ $ $ BASE 6,000 80.00 5 60.00 5 50,000 $ WORST 5,500 75.00 $ 62.00 $ 55,000 $ BEST 6,500 85.00 58.00 45,000 $ 27 28 29 30 31 32 Sales Variable Cost Fixed Cost Depreciation EBIT Taxes Net Income + Deprec 480,000 $ 380,000 50,000 40,000 30,000 10,200 19,800 40,000 412.500 5 341,000 55,000 40,000 (23,500) (7.990) (15,510) 40,000 552,500 377,000 45,000 40,000 90,500 30.770 59,730 40.000 TOTAL CF 59,800 24,490 99,730 NPV 15,566 (111,719) 159,504 IRR 15.194 -14.4% 40.9% Office Update To keep up-to-date with security updates, tocco K19 A B 0 1 Sensitivity Analysis 2 Units Price/unit Variable cost/unit Fixed cost year Base 6,000 80 60 50,000 Units 5,600 80 60 50,000 Fixed cost 6,000 80 60 55,000 Initial Investment $ 200,000 Depreciated to salvage value of over 5 years Depreclyr $ 40,000 Tax rate Required Return 34% 12% 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 23 27 29 20 30 31 32 30 34 Units Price/unit Variable costunit Fixed cost BASE 6,000 805 60$ 50,000 $ UNITS 5,500 80 $ 60$ 50,000 $ FC 6,000 80 60 55,000 1 Sales Variable Cost Fixed Cost Depreciation EBIT Taxes Net Income Deprec $ 480,000 $ 360,000 50,000 40,000 30,000 10,200 19,800 40,000 440,000 $ 330,000 50,000 40,000 20.000 6.800 13,200 40,000 480,000 380,000 55,000 40,000 25,000 8,500 16,500 40.000 TOTAL CF 59,800 53,200 56,500 NPV $ 15.5665 (8.226) $ 3 3,670 30 % Change in NPV % Change in Variable -152.8% -8.3% 30 -76,4% 10.0% SENSITIVITY PATIO LG BI U A Office Update To keep up-to-date with security updates, foces, and impro K19 4 X & fx B D E H Fixed Cost Depreciation EBIT Taxes Net Income Deprec 50,000 40,000 30,000 10 200 19,800 40,000 50,000 40,000 20,000 6.800 13,200 40,000 55,000 40,000 25,000 8,500 16,500 40,000 29 30 31 TOTAL CF 59,800 53,200 56,500 NPV 15,566 $ (8,226) 3,670 % Change in NPV % Change in Variable -152.8% -8.3% -76.4% 10.0% SENSITIVITY RATIO 38 37 39 39 40 41 42 43 44 45 18.34 DIRECT -7.641 INVERSE Sensitivity Ratio = (% Change in NPV/% Change in Variable Positive - Direct relationship Negative = Inverse relationship $ (200,000) $ (200,000) S (200,000) 59,800 53,200 56,500 59,800 53,200 56,500 59,800 53,200 56,500 59,800 53,200 56,500 59,800 53,200 56,500 PV NPV $ $ 215.566 $ 15,566 5 191,7745 (8,226) 5 203.670 3,670 Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelly Couts, who inherited the company. The company originally repaired radios and other household appliances when it was founded over 70 years ago. Over the years, the company has expanded, and it is now a reputable manufacturer of various specialty electronic items. Jay McCanless, a recent MBA graduate, has been hired by the company in its finance department. One of the major revenue-producing items manufactured by Conch Republic is a smart phone. Conch Republic currently has one smart phone model on the market and sales have been excellent. The smart phone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smart phone has limited features in comparison with newer models. Conch Republic spent $300,000 to develop a prototype for a new smart phone that has all the features of the excisting one but adds new features such as wifi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smart phone. Conch Republic can manufacture the new smart phone for $190 each in variable costs. Fixed costs for the operation are estimated to run $2.5 million per year. The estimated sales volume is 73,000, 85,000, 91,000, 87,000, and 50,000 per year for the next five years, respectively. The unit price of the new smart phone will be $360. The necessary equipment can be purchased for $13.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the value of the equipment in five years will be 1.2 million. Net working capital for the smart phones will be 11 percent of next year sales. Conch Republic has a 33 percent corporate tax rate and a required return of 11 percent. Shelly has asked Jay to prepare a report that answers the following questions : Questions 1. What is the payback period of the project? 2. What is the profitability index of the project? 3. What is the IRR of the project? 4. What is the NPV of the project? 5. Perform a sensitivity analysis for the price of the new smart phone. Mensure the effects on NPV by moving price 5% up and down. 6. Perform a sensitivity analysis for the quantity of phones sold. Measure the effects on NPV by moving quantity 5% up and down. 7. Should Conch Republic produce the new smart phone? 8. Suppose Conch Republic lose sales or other models because of the introduction of the new model. How would this affect your analysis? 0 Majestic Mulch and compost Company (MCC) YEAR M 4 6 2,000 3.000 L000 8.500 . 5.000 4000 2.000 80.00 25,000.00 120.00 3409 15.00 20.000.00 $ 120.00 $ 12000$ 10.00! 11000 0.00 110.00 S 5 Background Data Unt Sales Variable Costne Fred Costs per 9 Sale Price per un 50 Tax Rate 11 Required Retumen Project 12 YONWC 13 WWC of sales Equipment contin 15 Salvage Voyeur 10 17 Depreciation Collins Essentials MACRST Recowy Allen Book Value 110.00 BOL.000 of aquiment cost 200.000 1429 11020 SAS 24 TO 11 30,00 140 12401 98 920 243.320 22 TO 44 71,440 SOF 120 3560 20% 150,000 AerTo Save Value Salvage Value Bulee Year Caption Ta HOV.To 5400 105.000 30 Roured Net Wong Content 2222 YEAR intment woment Cow od 000 500 000 200.000 2.000 720.00 0000 Varios Fio Costs Depreciation 8.000 . 30.000 25,00 220 9.00 100,000 25.000 550.000 300.000 21.000 TI 40,000 74.000 21.000 330.000 100 2.00 1212 TO 25.000 H00 19.00 13 01 20 14220 1 34000 ME 2199 1980 IM 181.300 30 RO 7144 TA Nel Operating Add back Deprecat CASH FLOW Brown NWC & Recovery Savage Value TOTAL PROXECTO CE 12920 CALCON 112 16.00 TO 1 . . counted Cat crocon 110 164 CumCustom TRO 100 SEM 11 IN SON 05. WER MMOC Song sity + 0 Scenatio Analysis $ Units Price/unit Variable cost/unit Fixed cost year Base 6,000 80.00 $ 60.00 $ 50,000 $ Lower 5,500 75.00 $ 58.00 $ 45,000 Upper 6,500 85,00 62.00 55,000 $ 3 BASE BEST WORST 10 11 12 13 10 15 36 17 18 19 20 Initial Investment $ 200,000 Depreciated to salvage value of 0 over 5 years Deprecyr $ 40.000 Project Life 5 years Tax rate 34% Required return 12% Units Price/unit Variable cost/unit Fixed Cost $ $ $ BASE 6,000 80.00 $ 60.00 $ 50,000 $ WORST 5,500 75.00 62.00 $ $5,000 $ BEST 6.500 85.00 58.00 45,000 INNRRN $ Sales Variable Cost Fixed Cost Depreciation EBIT Taxes Net Income Deprec 480,000 $ 360,000 50,000 40,000 30,000 10,200 19.500 40,000 412.500 5 341,000 55,000 40,000 (23,500) (7.990) (15.510) 40.000 552,500 377.000 45,000 40,000 90,500 30.770 59,730 40,000 TOTAL CF 59.800 24.490 99,730 RESERRE NPV 15.565 [111.719) 159,504 IRR 1515 40.9% 40 NOTE Note in WORST CASE, tax credit for negative earnings 45 $ 200.000 200.000 5200,000) 52.600 99,730 9.300 99,730 52,800 32.730 2.800 2441 98.730 S. 24.40 99,730 PV NPV MMCC 15,665 Scenario 231 $159.504 1111.11 Senty + Sensitivity Analysis COM Uni 6,000 4.000 Units Print Variable cost Fred content 40 50,000 50,000 55.000 Initial restent 200.000 Depreciated to salvage value of over 5 years Deprecy 13 15 Tax rate Required Return 34% 12% 12 BASE 6.000 105 FC C.000 Units Price unit Variable costunit Fixed cost UNITS 5.500 B05 003 50.000 5 24 0.0005 SD 24 Sales Variable Cost Pred Cost Depreciation EBIT Taxes Net Income Deprec 450.000 5 360,000 50.000 40 000 30,000 10 200 19 500 40.000 440.000 330.000 50,000 40.000 20.000 5900 13.200 40,000 10.000 300.000 55.000 40.000 25.000 3.500 16.500 40.000 TOTAL CF 59.000 53.200 5.500 NPV 522615 152.0 Change in NPV Change in Variable 100 SENSITIVITY RATIO 11 DIRECT INVERSE Sensitivity Rate Change in PVChange in Varia Positive Direction Negative inverse relations 200.000 99.000 100 59.500 5.50 59.000 200.000 33.200 53200 53.200 53.200 53200 200.000 54.500 54500 SE 500 S 500 300 PV 191.22413 15 5 MMCC Scenario Sensitivity Ready Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelly Couts, who inherited the company. The company originally repaired radios and other household appliances when it was founded over 10 years ago. Over the years, the company has expanded, and it is now & reputable manufacturer of various specialty electronie items. Jay McCanless, a recent MBA graduate, has been hired by the company in its finance department. One of the major revenue-producing items manufactured by Conch Republic is a smart phone. Conch Republic currently has one smart phone model on the market and sales have been eccellent. The smart phone is a unique item in that it comes in a variety of tropical colors and is preprogrammed to play Jimmy Buffett music. However, as with any electronic item, technology changes rapidly, and the current smart phone has limited features in comparison with newer models. Conch Republic spent $300,000 to develop a prototype for a new smart phone that has all the features of the existing one bat adds new features such as wifi tethering. The company has spent a further $200,000 for a marketing study to determine the expected sales figures for the new smart phone Conch Republic can manufacture the new smart phone for $180 each in variable costs. Fixed costs for the operation are estimated to run $2.5 million per year. The estimated sales volume is 73,000, 85,000, 91,000, 87,000, and 50,000 per year for the next five years, respectively. The unit price of the new smart phone will be $360. The necessary equipment can be purchased for $13.5 million and will be deprecinted on a seven-yenr MACRS schedule. It is believed the value of the equipment in five years will be 1.2 million, Net working capital for the smartphones will be 11 percent of next year sales. Conch Republic hins n 33 percent corporate tax rate and a required return of 11 percent. Shelly hans naked Jay to prepare a report that answers the following questions Questions 1. What is the payback period of the project? 2. What is the profitability index of the project? 3. What is the IRR of the project? 4. What is the NPV of the project? 5. Perform a serbitivity analynis for the price of the new unit phone. Mentire the effects on NPV by moving price up and down. 6. Perform a sitivity analysis for the qunntity of phone sold. Mentre tho effects on NIV by moving quantity 5% up and down 7. Should Conch Republic produce the new snart phone? 8. Suppo Conch Republic loses sales on other models because of the introduction of the new model. How would this afect your ball? port ANN 10 29 General Delete Date BIU OA IMU S% Conditional Format Cell Formatting as Tablo Style Forma Office Update To keep upto-date with security updates, foxes and improvements, choose Check for Updates. 013 x x E G M N 1 2 3 41 7 3,000 5,000 6.000 8,500 6,000 5,000 4,000 3,000 120.005 120.000 120.00 110,00 S 110.00 $ 110.00 110.000 110.00 A 0 D Majestic Mulch and compost Company (MMCC) 2 3 YEAR 0 4 8 Background Data 0 Unit Sales Eamate 7 Variable Coat 60.00 Fixed Cori per year 25.000.00 Sale Price per unit 120.00 1 10 Tax Rate 34.0N 1 Required Return on Pro 15.0% 12 YONWG 320,000.00 13 NWC of sales 15% 14 Equipment cost installed $ 800,000 15 Salvage Value in year 2010. fequipment com to 17 Depreciation Calculation 18 lopment Depreciable Base 890,000 10 MACRS plyn 20 Recovery Allowance Book Value 14.25 114 320 845,680 24 495 195.920 489.760 17.49% 39020 340,000 12.495 99.320 249.90 8.92% 71,360 178,560 335 71.440 107, 120 8.93% 11.440 35.400 4.46% 35,600 o 20% 160,000 0 160.000 54400 105.400 23. Anar Tax Salvage Value Salvage Value Book Vrear) Capital Gallo Taxes 28 MSV (BV. TRO) 20 20 Required Working Capital Invest 21 32 02 YEAR Inwest 33 Bont Cout S Variable MMOO Scenario 20.000 00.000 100.000 101210 99 000 82.500 66000 49 400 0.0001 380.000 600.000 2.900 720,000 380,490 715,000 310,000 80.006 140.000 380,000 300.000 330.000 449.000 240.000 100.000 Bensivity - Arial 10 General General lol lol Pte 8 IU $ % ) Conditional Format Cell Formatting as Table Styles Omico Update To koop up to date with security updates, fixes, and improvements, choose Check for Updates. 013 0 C o E F 0 H M 20% 23 Aner.Tax Salvage Value 24 Salvage Value 20 Book Value (Year) 20 Capital Gaint. 27 Taxes 20 Net BV (V Taxes) 160,000 0 160,000 54 400 105,600 20,000 54.000 90,000 10.000 107 250 99,000 82.800 66,000 49.500 100,000) 30 Required Net Working Capital weatment 31 32 33 YEAR 34 this restent 35 Equipment Cost 30 Sales 37 Variable costs 30 Fixed Costa 30 Depreciation (po 40 EBT 41 Taxes 42 Net Operating income 43 Adid Back Depreciation 44 CASH FLOW from Operations 45 ww investment & Recovery 46 Salvage Value 47 TOTAL PROJECTED CF 40 49 Discounted Cash Flows 90 01 Cumulative Cashflows 360,000 180,000 25,000 114 120 40.680 13031 26,349 114120 141,109 4,000) 600,000 300.000 25.000 103 020 79,080 26. BET 52,193 195.920 248,113 30,000) 720,000 360,000 25,000 139.920 195.000 66327 128,753 715,000 390,000 25,000 99,920 200,000 68,027 132.053 98.220 231973 750 660,000 360,000 25,000 71360 203,640 69.230 134.402 71 360 205.762 8.250 550,000 300,000 25.000 71.440 153.560 52 210 101 350 71 440 17200 16,500 440,000 240,000 25,000 71.440 103.560 25 210 60,350 71.440 139,790 16,500 330,000 180,000 25,000 35.680 19 320 30,367 58,951 35.6.80 94,631 66,000 to 600 206,231 (20,000 266,073 (18.00) 120.000) TOTA109 212113 250.51 232.122 214,012 15200 1920,000) 160,388 164821 133.000 108.402 01.035 93.190 (712,031 58755 87,031 (320,000) 100.718) 250,040 (17.32) 135,000 385.979 542.269 106,500 NPV IRR 83 34 65 10 57 17.24% 4.08 AMCC teeralio Sensitivity Office Update To keep up-todate with security updates, focos, an 021 x & fel 1 Scenario Analysis B G 2 3 4 5 6 7 Units Price/unit Variable cost/unit Fixed costlyear Base 6,000 80.00 $ 60.00 $ 50,000 $ Lower 5,500 75.00 $ 58.00 $ 45,000 $ Upper 6,500 85.00 62.00 55,000 $ 8 9 BASE BEST WORST Initial Investment $ 200,000 Depreciated to salvage value of 0 over 5 years Deprec/yr 40,000 Project Lite Tax rate 34% Required return 12% 5 years 10 11 12 13 14 15 16 17 19 19 20 21 22 23 20 25 Units Price/unit Variable cost/unit Fixed Cost $ $ $ BASE 6,000 80.00 5 60.00 5 50,000 $ WORST 5,500 75.00 $ 62.00 $ 55,000 $ BEST 6,500 85.00 58.00 45,000 $ 27 28 29 30 31 32 Sales Variable Cost Fixed Cost Depreciation EBIT Taxes Net Income + Deprec 480,000 $ 380,000 50,000 40,000 30,000 10,200 19,800 40,000 412.500 5 341,000 55,000 40,000 (23,500) (7.990) (15,510) 40,000 552,500 377,000 45,000 40,000 90,500 30.770 59,730 40.000 TOTAL CF 59,800 24,490 99,730 NPV 15,566 (111,719) 159,504 IRR 15.194 -14.4% 40.9% Office Update To keep up-to-date with security updates, tocco K19 A B 0 1 Sensitivity Analysis 2 Units Price/unit Variable cost/unit Fixed cost year Base 6,000 80 60 50,000 Units 5,600 80 60 50,000 Fixed cost 6,000 80 60 55,000 Initial Investment $ 200,000 Depreciated to salvage value of over 5 years Depreclyr $ 40,000 Tax rate Required Return 34% 12% 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 23 27 29 20 30 31 32 30 34 Units Price/unit Variable costunit Fixed cost BASE 6,000 805 60$ 50,000 $ UNITS 5,500 80 $ 60$ 50,000 $ FC 6,000 80 60 55,000 1 Sales Variable Cost Fixed Cost Depreciation EBIT Taxes Net Income Deprec $ 480,000 $ 360,000 50,000 40,000 30,000 10,200 19,800 40,000 440,000 $ 330,000 50,000 40,000 20.000 6.800 13,200 40,000 480,000 380,000 55,000 40,000 25,000 8,500 16,500 40.000 TOTAL CF 59,800 53,200 56,500 NPV $ 15.5665 (8.226) $ 3 3,670 30 % Change in NPV % Change in Variable -152.8% -8.3% 30 -76,4% 10.0% SENSITIVITY PATIO LG BI U A Office Update To keep up-to-date with security updates, foces, and impro K19 4 X & fx B D E H Fixed Cost Depreciation EBIT Taxes Net Income Deprec 50,000 40,000 30,000 10 200 19,800 40,000 50,000 40,000 20,000 6.800 13,200 40,000 55,000 40,000 25,000 8,500 16,500 40,000 29 30 31 TOTAL CF 59,800 53,200 56,500 NPV 15,566 $ (8,226) 3,670 % Change in NPV % Change in Variable -152.8% -8.3% -76.4% 10.0% SENSITIVITY RATIO 38 37 39 39 40 41 42 43 44 45 18.34 DIRECT -7.641 INVERSE Sensitivity Ratio = (% Change in NPV/% Change in Variable Positive - Direct relationship Negative = Inverse relationship $ (200,000) $ (200,000) S (200,000) 59,800 53,200 56,500 59,800 53,200 56,500 59,800 53,200 56,500 59,800 53,200 56,500 59,800 53,200 56,500 PV NPV $ $ 215.566 $ 15,566 5 191,7745 (8,226) 5 203.670 3,670