SUPPORTING MATERIAL FOR SNEAKERS

Period $201320142015201620172018$

Volume of Sales $12000001600000140000024000001800000900000$

Sale Price $115115115115115115$

Cash Revenue $138000000184000000161000000276000000207000000103500000$

Suggested Price $190190190190190190$

Gross Margin $40\%40\%40\%40\%40\%40\%$

Amount$(40\%*190)767676767676$

Net Price$(190-$ G$.$Mrgn$)114114114114114114$

Variable Cost$(55\%*$rev$)55\%55\%55\%55\%55\%55\%$

Advertising expenses $2$mil $2$mil $2$mil $2$mil $2$mil $2$mil

Interest Cost $1\mathrm{.}2$mil $1\mathrm{.}2$mil $1\mathrm{.}2$mil $1\mathrm{.}2$mil $1\mathrm{.}2$mil $1\mathrm{.}2$mil

Real Estate $150000000150000000150000000150000000150000000150000000$

Depreciation$(\%)2\mathrm{.}60\%5\%4\mathrm{.}70\%4\mathrm{.}50\%4\mathrm{.}30\%4\%$

Amount$($R$.$ Estate$*$Depr$)390000075000007050000675000064500006000000$

Equip & Installation $200000002000000020000000200000002000000020000000$

Depreciation$(\%)20\%32\%19\%12\%11\%6\%$

Amount$($E & I$*$Deprtion$)400000064000003800000240000022000001200000$

Tax $40\%40\%40\%40\%40\%40\%$

Discount rate $11\%11\%11\%11\%11\%11\%$

Lost Sale $3500000015000000$

Total lost sale $50000000$

Lost sale Gross Margin

$5000000040\%$

Lost Revenue$($lost sale$*$g$.$mrgn $20000000$

CAPITAL BUDGETING FOR SNEAKERS PROJECT

Period $201320142015201620172018$

Year $0123456$

Beginning cash flows

Real estate $(150$m$)$

Equipment $(15$m$)$

Working capital $(10$m$)$

Total $(175$m$)$

Operating cash flows

Volume of Sales $12000001600000140000024000001800000900000$

Sale Price $115115115115115115$

Cash Revenue $138000000184000000161000000276000000207000000103500000$

Variable Cost $759000001012000008855000015180000011385000056925000$

Gross profit $6210000082800000724500001242000009315000046575000$

Selling, general, and administrative expenses $700000070000007000000700000070000007000000$

Advertising expenses $200000020000002000000300000020000002000000$

Other advertising expenses $250000001500000010000000300000002500000015000000$

Operating income $281000005880000053450000842000005915000022575000$

Interest expense $120000012000001200000120000012000001200000$

Depreciation of equipment $400000064000003800000240000022000001200000$

Depreciation of property $390000075000007050000675000064500006000000$

Total depreciation $79000001390000010850000915000086500007200000$

Income before tax $190000004370000041400000738500004930000014175000$

Tax expense $(40\%)7600000174800001656000029540000197200005670000$

Add back deprciation $79000001390000010850000915000086500007200000$

Net income after tax$($FCF$)193000004012000035690000534600003823000015705000$