I need help calculating the future cash flows. What information would I use to calculated it with the information provided? What formula would be used to calculate A) future cash flows B) Terminal Value C) Total Future cash flow D) NPV
1 Exhibit 2 Selected Operating Projections for Design Your Own Doll ($ in thousands) 2010 2011 2012 6,000 2013 14,360 139.33% 2014 20,222 40.82% 2015 21,435 6.00% 2016 22,721 6.00% 2017 24,084 6.00% 2018 25,529 6.00% 2019 27,061 6.00% 2020 28,685 6.00% 1,650 1,683 1,717 1,751 1,786 1,822 1,858 1,895 1,933 435 4 Revenue 5 Revenue growth 5 Production costs 7 Fixed production expense (excl. depreciation) B Additional development costs - Variable production costs L0 Depreciation 1 Total production costs 2 Selling, General & Administrative 3 Total operating expenses 4 Operating profit 11,427 12,983 310 462 435 2,250 310 4,210 1,240 5,450 550 7,651 310 9,644 2,922 12,566 1,794 12,182 436 14,369 4,287 18,656 2,779 13,454 4,044 17,498 2,724 13,833 490 16,145 4,817 20,962 3,122 15,231 4,544 19,775 2,946 14,736 520 17,114 5,106 22,220 3,309 15,694 551 18,140 5,412 23,552 3,509 1,201 1,201 (1,201) 16,712 584 19,229 5,737 24,966 3,719 435 (435) 6 Working capital assumptions 7 Minimum cash balance as % of sales 8 Days Sales Outstanding 9 Inventory turnover (prod. cost / ending inv.) 0 Days payable outstanding (based on tot. op. exp.) 3% 59.2 12.2 33.7 3% 59.2 12.3 33.8 3% 59.2 12.6 33.9 3% 59.2 12.7 33.9 3% 59.2 12.7 33.9 3% 59.2 12.7 33.9 3% 59.2 12.7 33.9 3% 59.2 12.7 33.9 3% 59.2 12.7 33.9 2 Capital expenditures 4610 0 310 310 2192 826 875 928 983 1043 1105 682 812 5 Cash L6 Accounts receivable 7 Inventory 8 Accounts payable 9 Net working capital 180 973 345 503 995 431 2,329 784 1,164 2,380 607 3,280 1,068 1,625 3,329 643 3,477 1,131 1,733 3,518 3,685 1,199 1,837 3,729 723 3,906 1,271 1,947 3,953 766 4,141 1,348 2,064 4,190 4,389 1,428 2,187 4,442 861 4,652 1,514 2,319 4,708 1,000 NWC (Net working Capital) 1,000 3,708 WN 5 1,380 2,329 2 ,518 2,7292 ,953 3,190 3,442 TIME PERIOD OF THE CASH FLOW, RELATIVE TO THE INVESTMENT (just to simplify the formula setup below) 2 3 9 2012 2013 2014 2015 2016 2017 2018 2019 0 2010 1 2011 10 2020 11 Thereafter 5 TO DO (B): Determine cash flows (see Higgins 7, esp. 266-277) 2,946 7 Operating profit (from above, based on given data) 8 Tax (40%) After to seafit ICAO Tables 2-4 Exhibit 1 Exhibit 2 (1,201) (480) (435) (174) 550 220 220 1,794 718 1.070 2,724 1,090 2,779 1,112 1307 3,122 1,249 1073 3,309 1,324 1,178 3,509 1,404 100 3,719 1,488 2221 inca 1 COA 1.700 1 noc Match My Doll NPV (keyl Design Your Own Doll NPV (keyl -2 Capital expenditures 4610 310 310 2192 826 875 928 983 1043 1105 6 5 Cash Accounts receivable 7 Inventory 8 Accounts payable 9 Net working capital 180 973 345 503 995 431 2,329 784 1,164 2,380 607 3,280 1,068 1,625 3,329 643 3,477 1,131 1,733 3,518 682 3,685 1,199 1,837 3,729 723 3,906 1,271 1,947 3,953 766 4,141 1,348 2,064 4,190 812 4,389 1,428 2,187 4,442 861 4,652 1,514 2,319 4,708 1,000 31 NWC (Net working Capital) 1,000 5 1,380 2,329 2,518 2,7292,953 3,1903,4423,708 TIME PERIOD OF THE CASH FLOW, RELATIVE TO THE INVESTMENT (just to simplify the formula setup below) 2 4 10 2012 2013 2014 2015 2016 2017 2018 2019 2020 0 2010 1 2011 11 Thereafter 2019 5 TO DO (B): Determine cash flows (see Higgins 7, esp. 266-277) 17 Operating profit (from above, based on given data) 18 Tax (40%) 19 After-tax profit (60%) 10 Depreciation 11 Change in net working capital (based on TO DO (A)) 12 Capital expenditures (1,201) (480) (721) (40.6) (435) (174) (261) (14.7) 550 220 330 18.6 (5) 310 1,794 718 1,076 60.6 1,385 310 2,724 1,090 1,634 92.1 949 2192 2,779 1,112 1,667 93.9 189 2,946 1,178 1,768 99.6 211 875 3,122 1,249 1,873 105.5 224 928 3,309 1,324 1,985 111.8 237 983 3,509 1,404 2,105 118.6 252 1043 3,719 1,488 2,231 125.7 267 1105 1,000 4610 0 826 14 Future cash flows 15 Terminal value 16 Total future cash flows 3,849 3,926 61,340 (1,276) (1,301) (20,332) 664 677 10,575 62 63 985 2,970 3,029 47,329 2,398 2,446 38,220 2,531 2,582 40,339 2,683 2,737 42,761 2,843 2,900 45,311 3,015 3,076 48,059 3,196 3,259 50,929 ($8,372.36) $4,354.83 $405.49 $19,489.56 $15,738.66 $16,611.26 $17,608.63 $18,658.86 $19,790.47 $20,972.27 18 NPV 19 IRR $25,259.46 -1% Formula for present value = cash flow/ (1+discount rate)"time NPV = Sum of 0 to 10 + PV of TV 3 1 Exhibit 2 Selected Operating Projections for Design Your Own Doll ($ in thousands) 2010 2011 2012 6,000 2013 14,360 139.33% 2014 20,222 40.82% 2015 21,435 6.00% 2016 22,721 6.00% 2017 24,084 6.00% 2018 25,529 6.00% 2019 27,061 6.00% 2020 28,685 6.00% 1,650 1,683 1,717 1,751 1,786 1,822 1,858 1,895 1,933 435 4 Revenue 5 Revenue growth 5 Production costs 7 Fixed production expense (excl. depreciation) B Additional development costs - Variable production costs L0 Depreciation 1 Total production costs 2 Selling, General & Administrative 3 Total operating expenses 4 Operating profit 11,427 12,983 310 462 435 2,250 310 4,210 1,240 5,450 550 7,651 310 9,644 2,922 12,566 1,794 12,182 436 14,369 4,287 18,656 2,779 13,454 4,044 17,498 2,724 13,833 490 16,145 4,817 20,962 3,122 15,231 4,544 19,775 2,946 14,736 520 17,114 5,106 22,220 3,309 15,694 551 18,140 5,412 23,552 3,509 1,201 1,201 (1,201) 16,712 584 19,229 5,737 24,966 3,719 435 (435) 6 Working capital assumptions 7 Minimum cash balance as % of sales 8 Days Sales Outstanding 9 Inventory turnover (prod. cost / ending inv.) 0 Days payable outstanding (based on tot. op. exp.) 3% 59.2 12.2 33.7 3% 59.2 12.3 33.8 3% 59.2 12.6 33.9 3% 59.2 12.7 33.9 3% 59.2 12.7 33.9 3% 59.2 12.7 33.9 3% 59.2 12.7 33.9 3% 59.2 12.7 33.9 3% 59.2 12.7 33.9 2 Capital expenditures 4610 0 310 310 2192 826 875 928 983 1043 1105 682 812 5 Cash L6 Accounts receivable 7 Inventory 8 Accounts payable 9 Net working capital 180 973 345 503 995 431 2,329 784 1,164 2,380 607 3,280 1,068 1,625 3,329 643 3,477 1,131 1,733 3,518 3,685 1,199 1,837 3,729 723 3,906 1,271 1,947 3,953 766 4,141 1,348 2,064 4,190 4,389 1,428 2,187 4,442 861 4,652 1,514 2,319 4,708 1,000 NWC (Net working Capital) 1,000 3,708 WN 5 1,380 2,329 2 ,518 2,7292 ,953 3,190 3,442 TIME PERIOD OF THE CASH FLOW, RELATIVE TO THE INVESTMENT (just to simplify the formula setup below) 2 3 9 2012 2013 2014 2015 2016 2017 2018 2019 0 2010 1 2011 10 2020 11 Thereafter 5 TO DO (B): Determine cash flows (see Higgins 7, esp. 266-277) 2,946 7 Operating profit (from above, based on given data) 8 Tax (40%) After to seafit ICAO Tables 2-4 Exhibit 1 Exhibit 2 (1,201) (480) (435) (174) 550 220 220 1,794 718 1.070 2,724 1,090 2,779 1,112 1307 3,122 1,249 1073 3,309 1,324 1,178 3,509 1,404 100 3,719 1,488 2221 inca 1 COA 1.700 1 noc Match My Doll NPV (keyl Design Your Own Doll NPV (keyl -2 Capital expenditures 4610 310 310 2192 826 875 928 983 1043 1105 6 5 Cash Accounts receivable 7 Inventory 8 Accounts payable 9 Net working capital 180 973 345 503 995 431 2,329 784 1,164 2,380 607 3,280 1,068 1,625 3,329 643 3,477 1,131 1,733 3,518 682 3,685 1,199 1,837 3,729 723 3,906 1,271 1,947 3,953 766 4,141 1,348 2,064 4,190 812 4,389 1,428 2,187 4,442 861 4,652 1,514 2,319 4,708 1,000 31 NWC (Net working Capital) 1,000 5 1,380 2,329 2,518 2,7292,953 3,1903,4423,708 TIME PERIOD OF THE CASH FLOW, RELATIVE TO THE INVESTMENT (just to simplify the formula setup below) 2 4 10 2012 2013 2014 2015 2016 2017 2018 2019 2020 0 2010 1 2011 11 Thereafter 2019 5 TO DO (B): Determine cash flows (see Higgins 7, esp. 266-277) 17 Operating profit (from above, based on given data) 18 Tax (40%) 19 After-tax profit (60%) 10 Depreciation 11 Change in net working capital (based on TO DO (A)) 12 Capital expenditures (1,201) (480) (721) (40.6) (435) (174) (261) (14.7) 550 220 330 18.6 (5) 310 1,794 718 1,076 60.6 1,385 310 2,724 1,090 1,634 92.1 949 2192 2,779 1,112 1,667 93.9 189 2,946 1,178 1,768 99.6 211 875 3,122 1,249 1,873 105.5 224 928 3,309 1,324 1,985 111.8 237 983 3,509 1,404 2,105 118.6 252 1043 3,719 1,488 2,231 125.7 267 1105 1,000 4610 0 826 14 Future cash flows 15 Terminal value 16 Total future cash flows 3,849 3,926 61,340 (1,276) (1,301) (20,332) 664 677 10,575 62 63 985 2,970 3,029 47,329 2,398 2,446 38,220 2,531 2,582 40,339 2,683 2,737 42,761 2,843 2,900 45,311 3,015 3,076 48,059 3,196 3,259 50,929 ($8,372.36) $4,354.83 $405.49 $19,489.56 $15,738.66 $16,611.26 $17,608.63 $18,658.86 $19,790.47 $20,972.27 18 NPV 19 IRR $25,259.46 -1% Formula for present value = cash flow/ (1+discount rate)"time NPV = Sum of 0 to 10 + PV of TV 3
