CREATE A NPW EQUATION FROM A PW DISTRIBUTION 2020 2021 Borrow Money (Portion) Operating Income Statement Revenue Expenses Depreciation Interest Taxable income Tax Net Income S $ $ 5 $ $ s 50.000 (30,000) (2.000) (1,136) 16 864 (2.530) 14,334 $ $ 14,334 2.000 $ 125.000) Cash Flow Statement Net Income Depreciation Investment in Machine Principle Working Capital Loan Net Cash Flow $ (5,642) $ $ $ 2,000) 12,000 (15,000) 2020 2021 Corresponding NPW Equation Operating Income Statement Revenue Expenses Depreciation Interest Taxable income Tax Net Income Cash Flow Statement Net Income Depreciation Investment in Machine Principle Working Capital Loan Net Cash Flow P/F Factor@8% PW NPW EOMATION (14) 5. An investment project is initiated in 2020 and will terminate at the end of 2021. The cash flow statement on the next page is nearly complete, except for the PW and NPW. A risk analysis will be performed on the cash flow of this project. In the lower table labeled Corresponding NPW Equation, determine the NPW equation for the project in the years 2020 and 2021. In 2021, 5,000 units are expected to be sold at $10 each. It costs $6.00 each to manufacture a unit. The income tax rate is 15%. An expected 5% inflation in the cost of materials means that the total needed working capita in 2021 is 5% greater than the working capital required for 2020. Interest rate and MARR are both 8%. a) Fill in the two heavily outlined boxes for 2021 Working Capital and 2021 Net Cash Flow b) Determine the NPW equation for the years 2020 and 2021 (combined) for input into @RISK for a Monte Carlo risk analysis. Place the NPW equation in the heavy box labeled NPW Equation. CREATE A NPW EQUATION FROM A PW DISTRIBUTION 2020 2021 Borrow Money (Portion) Operating Income Statement Revenue Expenses Depreciation Interest Taxable income Tax Net Income S $ $ 5 $ $ s 50.000 (30,000) (2.000) (1,136) 16 864 (2.530) 14,334 $ $ 14,334 2.000 $ 125.000) Cash Flow Statement Net Income Depreciation Investment in Machine Principle Working Capital Loan Net Cash Flow $ (5,642) $ $ $ 2,000) 12,000 (15,000) 2020 2021 Corresponding NPW Equation Operating Income Statement Revenue Expenses Depreciation Interest Taxable income Tax Net Income Cash Flow Statement Net Income Depreciation Investment in Machine Principle Working Capital Loan Net Cash Flow P/F Factor@8% PW NPW EOMATION (14) 5. An investment project is initiated in 2020 and will terminate at the end of 2021. The cash flow statement on the next page is nearly complete, except for the PW and NPW. A risk analysis will be performed on the cash flow of this project. In the lower table labeled Corresponding NPW Equation, determine the NPW equation for the project in the years 2020 and 2021. In 2021, 5,000 units are expected to be sold at $10 each. It costs $6.00 each to manufacture a unit. The income tax rate is 15%. An expected 5% inflation in the cost of materials means that the total needed working capita in 2021 is 5% greater than the working capital required for 2020. Interest rate and MARR are both 8%. a) Fill in the two heavily outlined boxes for 2021 Working Capital and 2021 Net Cash Flow b) Determine the NPW equation for the years 2020 and 2021 (combined) for input into @RISK for a Monte Carlo risk analysis. Place the NPW equation in the heavy box labeled NPW Equation
