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Research and development $10,000,000 Test marketing cost $5,000,000 Initial equipment cost $160,000,000 Equipment salvage value $65,000,000 OEM market: Price $41 Variable cost $29 Automobile production
| Research and development | $10,000,000 | |||||
| Test marketing cost | $5,000,000 | |||||
| Initial equipment cost | $160,000,000 | |||||
| Equipment salvage value | $65,000,000 | |||||
| OEM market: | ||||||
| Price | $41 | |||||
| Variable cost | $29 | |||||
| Automobile production | 6,200,000 | |||||
| Growth rate | 2.50% | |||||
| Market share | 11.00% | |||||
| Replacement market: | ||||||
| Price | $62 | |||||
| Variable cost | $29 | |||||
| Market sales | 32,000,000 | |||||
| Growth rate | 2.00% | |||||
| Market share | 8.00% | |||||
| Price increase above inflation | 1% | |||||
| VC increase above inflation | 1% | |||||
| Marketing and general costs | $43,000,000 | |||||
| Tax rate | 40.00% | |||||
| Inflation rate | 3.25% | |||||
| Required return | 13.40% | |||||
| Initial NWC | $9,000,000 | |||||
| NWC percentage of sales | 15% | |||||
| Year 1 depreciation | 14.29% | |||||
| Year 2 depreciation | 24.49% | |||||
| Year 3 depreciation | 17.49% | |||||
| Year 4 depreciation | 12.49% | |||||
| Output area: | ||||||
| Nominal price increase | 4.28% | Hint: Use this rate as annual rate of increase in price | ||||
| Nominal VC increase | 4.28% | Hint: Use this rate as annual rate of increase in VC | ||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | ||
| OEM: | ||||||
| Automobiles sold | ||||||
| Tires for automobiles sold | ||||||
| SuperTread tires sold | ||||||
| Price | ||||||
| Replacement market: | ||||||
| Total tires sold in market | ||||||
| SuperTread tires sold | ||||||
| Price | ||||||
| Revenue: | ||||||
| OEM market | ||||||
| Replacement market | ||||||
| Total | ||||||
| Variable costs: | ||||||
| OEM market | ||||||
| Replacement market | ||||||
| Total | ||||||
| Revenue | ||||||
| Variable costs | ||||||
| Marketing and general costs | ||||||
| Depreciation | ||||||
| EBT | ||||||
| Tax | ||||||
| Net income | ||||||
| OCF | ||||||
| New working capital: | ||||||
| Beginning | ||||||
| Ending | ||||||
| NWC cash flow | ||||||
| Book value of equipment | ||||||
| Aftertax salvage value: | ||||||
| Market value | ||||||
| Taxes | ||||||
| Total | ||||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | ||
| Operating cash flow | ||||||
| Capital spending | ||||||
| Net working capital | ||||||
| Total cash flows | ||||||
| Discounted cash flow | ||||||
| NPV | ||||||
| IRR | ||||||
| Profitability index | ||||||
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Real Estate Finance And Investments
Authors: William Brueggeman, Jeffrey Fisher
13th Edition
0073524719, 9780073524719
