How do you determine the Net working capital recovery, PP&E, Total Cash Flows, Discount Rate, PV of Terminal Value, PV (FCF), Acquisition Cost, and NPV of Collinsville Plant?

Projected Free Cash Flow (Before Investment in Laminate Technology) Dixon's Investment in Collinsville Plant Items 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1 8840 9440 560 2+ Net PP&E (start of year) Capital Expenditures Depreciation Net PP&E (end of year) 10600 485 1060 10025 10025 525 1110 9440 8230 600 1270 7560 7560 600 1330 6830 600 1210 8230 6830 600 1390 6040 6040 600 1450 5190 5190 600 1510 4280 4280 600 1570 3310 3- 1160 8840 4 = 5 2072 2072 2072 2072 2072 Net Working capital Change in Net Working Capital 1196 -204 1512 316 1778 266 1922 144 2072 150 6 0 0 0 0 0 7 1630 1210 1574 1450 8+ Operating profits (after taxes) Depreciation Change in Net Working Capital Capital Expenditures 1574 1510 433 1060 -204 485 1153 1110 316 525 1574 1270 150 1578 1160 266 560 1574 1330 0 1574 1390 0 600 1574 1570 0 600 9- 0 144 600 0 600 10 - 600 600 600 11 = Free Cash Flows (FCF) 1212 1422 1912 2096 2094 2304 2364 2424 2484 2544 12 PV of FCF 1054 1075 1257 1198 1041 996 888 792 706 629 13 PV (first 5 years) PV (all 10 years) Use Exhibit 8 for data inputs 5625 9635 14 B D Solution - 4 Present Value (PV) of Terminal Values (TV) NPV of Collinsville Plant (Before Laminate Technology) Approch 1 Approach 2 Cost of Equity Dixon's Target debt ratio for Collinsville: D/V 1 Continue 10 years, scrap plant at zero salvage value for tax Sell assets at Book value at the benefits, recover 100% working end of 5 years capital 1 Net working capital recovery Net PP&E recovery 2 + 3= Total Cash Flows 5 Discount rate 6 PV of Terminal Value 7 + 8 = PV (FCF) Total PV = PV(TV) + PV(FCF) Acquisition Cost 9- 10 = NPV of Collinsville Plant (before Laminate technology) Use inputs from Sol-3 Projected Free Cash Flow (Before Investment in Laminate Technology) Dixon's Investment in Collinsville Plant Items 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1 8840 9440 560 2+ Net PP&E (start of year) Capital Expenditures Depreciation Net PP&E (end of year) 10600 485 1060 10025 10025 525 1110 9440 8230 600 1270 7560 7560 600 1330 6830 600 1210 8230 6830 600 1390 6040 6040 600 1450 5190 5190 600 1510 4280 4280 600 1570 3310 3- 1160 8840 4 = 5 2072 2072 2072 2072 2072 Net Working capital Change in Net Working Capital 1196 -204 1512 316 1778 266 1922 144 2072 150 6 0 0 0 0 0 7 1630 1210 1574 1450 8+ Operating profits (after taxes) Depreciation Change in Net Working Capital Capital Expenditures 1574 1510 433 1060 -204 485 1153 1110 316 525 1574 1270 150 1578 1160 266 560 1574 1330 0 1574 1390 0 600 1574 1570 0 600 9- 0 144 600 0 600 10 - 600 600 600 11 = Free Cash Flows (FCF) 1212 1422 1912 2096 2094 2304 2364 2424 2484 2544 12 PV of FCF 1054 1075 1257 1198 1041 996 888 792 706 629 13 PV (first 5 years) PV (all 10 years) Use Exhibit 8 for data inputs 5625 9635 14 B D Solution - 4 Present Value (PV) of Terminal Values (TV) NPV of Collinsville Plant (Before Laminate Technology) Approch 1 Approach 2 Cost of Equity Dixon's Target debt ratio for Collinsville: D/V 1 Continue 10 years, scrap plant at zero salvage value for tax Sell assets at Book value at the benefits, recover 100% working end of 5 years capital 1 Net working capital recovery Net PP&E recovery 2 + 3= Total Cash Flows 5 Discount rate 6 PV of Terminal Value 7 + 8 = PV (FCF) Total PV = PV(TV) + PV(FCF) Acquisition Cost 9- 10 = NPV of Collinsville Plant (before Laminate technology) Use inputs from Sol-3