OCF:
Net new sales		$ 60,325,000.00	$ 70,775,000.00	$ 66,875,000.00	$ 50,825,000.00	$ 40,125,000.00
Net incremental VC		$ 29,750,000.00	$ 31,950,000.00	$ 27,500,000.00	$ 20,900,000.00	$ 16,500,000.00
Fixed costs		$ 6,400,000.00	$ 6,400,000.00	$ 6,400,000.00	$ 6,400,000.00	$ 6,400,000.00
Depreciation		$ 6,216,150.00	$ 10,653,150.00	$ 7,608,150.00	$ 5,433,150.00	$ 3,884,550.00
EBT		$ 17,958,850.00	$ 21,771,850.00	$ 25,366,850.00	$ 18,091,850.00	$ 13,340,450.00
Tax	21%	$ 3,771,358.50	$ 4,572,088.50	$ 5,327,038.50	$ 3,799,288.50	$ 2,801,494.50
Net income		$ 14,187,491.50	$ 17,199,761.50	$ 20,039,811.50	$ 14,292,561.50	$ 10,538,955.50
+Depreciation		$ 6,216,150.00	$ 10,653,150.00	$ 7,608,150.00	$ 5,433,150.00	$ 3,884,550.00
OCF		$ 20,403,641.50	$ 27,852,911.50	$ 27,647,961.50	$ 19,725,711.50	$ 14,423,505.50
Net Working Capital:	20%
Beg WC			$ 12,065,000.00	$ 14,155,000.00	$ 13,375,000.00	$ 10,165,000.00
End WC		$ 12,065,000.00	$ 14,155,000.00	$ 13,375,000.00	$ 10,165,000.00	$ -
CF from WC		$ (12,065,000.00)	$ (2,090,000.00)	$ 780,000.00	$ 3,210,000.00	$ 10,165,000.00
Capital Spending:
Cost of new equipment	$ (43,500,000.00)
Book value of equipment	$ 43,500,000.00	$ 37,283,850.00	$ 26,630,700.00	$ 19,022,550.00	$ 13,589,400.00	$ 9,704,850.00
CF on sale of equipment	$ 7,173,018.50					$ 6,500,000.00
Tax on sale of equipment	$ 673,018.50					$ 673,018.50
Ending book value of equip	$ 9,704,850.00
TOTAL PROJECT CASH FLOWS	$ (43,500,000.00)	$ 8,338,641.50	$ 25,762,911.50	$ 28,427,961.50	$ 22,935,711.50	$ 31,761,524.00

Fundamentals of Corporate te Finance-Ross, Westerfield, Jordan, 12e, PROJECT ANALYSIS AND EVALUATION Westerfield Page CONCH REPUBLIC ELECTRONICS, PART 2 Shelley Cou McCanless concerns s, the owner of Conch Republic Electronics, has received the capital budgeting analysis from Jay for the new smartphone the company is considering Shelley is pleased with the results, but she still has new smartphone. Conch Republic has used a small market research firm for the past 20 years, but projections presented recently the founder of that firm has retired. Because of this, Shelley is not convinced the sales by the market research firm are entirely accurate. Additionally, because of rapid changes in technology, she is concerned that a competitor may enter the market. This would likely force Conch Republic to lower the sales price of its new smartphone. For these reasons, she has asked Jay to analyze how changes in the price of the new smartphone and changes in the quantity sold will affect the NPV of the project Shelley has asked Jay to prepare a memo answering the following questions QUESTIONS 1. How sensitive is the NPV to changes in the price of the new smartphone? 2. How sensitive is the NPV to changes in the quantity sold of the new smartphone? Go back Previous HighlightPrevious Section Next Section Next Highlight 11/17/2018 up Fundamentals of Corporate te Finance-Ross, Westerfield, Jordan, 12e, PROJECT ANALYSIS AND EVALUATION Westerfield Page CONCH REPUBLIC ELECTRONICS, PART 2 Shelley Cou McCanless concerns s, the owner of Conch Republic Electronics, has received the capital budgeting analysis from Jay for the new smartphone the company is considering Shelley is pleased with the results, but she still has new smartphone. Conch Republic has used a small market research firm for the past 20 years, but projections presented recently the founder of that firm has retired. Because of this, Shelley is not convinced the sales by the market research firm are entirely accurate. Additionally, because of rapid changes in technology, she is concerned that a competitor may enter the market. This would likely force Conch Republic to lower the sales price of its new smartphone. For these reasons, she has asked Jay to analyze how changes in the price of the new smartphone and changes in the quantity sold will affect the NPV of the project Shelley has asked Jay to prepare a memo answering the following questions QUESTIONS 1. How sensitive is the NPV to changes in the price of the new smartphone? 2. How sensitive is the NPV to changes in the quantity sold of the new smartphone? Go back Previous HighlightPrevious Section Next Section Next Highlight 11/17/2018 up