The company you are analysing is starting a new project. The initial cost of the project (CF0) is 10% of the most recent years capital expenditure of the company. With this new project, the company is going to receive a cash flow of 1% of the most recent years revenue for each of the next five years (CF1,, CF5).
- recent years capital expenditure of the company.
- Recent Revenue
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Calculate the Net Present Value, and Internal Rate of Return of this project.
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Should the company proceed with this investment?
64 60 37 36 7 4 Annual Standardised in Millions of New Zealand Dollars 5 2019 2018 2017 2016 2015 6 Earnings Quality Score N/A Period End Date 30-Jun-2019 30-Jun-2018 30-Jun-2017 30-Jun-2016 30-Jun-2015 8 Cash Flow-Operating Activities (NZD Millions) 9 Cash Receipts 1,952.0 1,800.0 1,539.0 1,515.0 1,652.0 10 Cash Payments (1,478.0) (1,232.0) (1,022.0) (1,051.0) (1,168.0) 11 Cash Taxes Paid (79.0) (102.0) (52.0) (89.0) (79.0) 12 Cash Interest Paid (70.0) (92.0) (95.0) (98.0) (101.0) 13 Changes in Working Capital 1.0 2.0 2.0 3.0 5.0 14 Other Operating Cash Flow 1.0 2.0 2.0 3.0 5.0 15 Cash from Operating Activities 326.0 376.0 372.0 280.0 309.0 16 (122.0) (93.0) (29.0) 220.0 0.0 17 Cash Flow-Investing Activities (NZD Millions) 18 Capital Expenditures 19 Purchase of Fixed Assets 20 Purchase/Acquisition of Intangibles 21 Other Investing Cash Flow Items, Total 22 Sale of Fixed Assets 23 Sale/Maturity of Investment 24 Purchase of Investments 25 Sale of Intangible Assets 26 Other Investing Cash Flow 27 Cash from Investing Activities (127.0) (94.0) (33.0) (133.0) 5.0 (123.0) (103.0) (20.0) 33.0 (90.0) (78.0) (12.0) 53.0 47.0 (118.0) (105.0) (13.0)| 15.0 0.0 9.0 0.0 (55.0) (144.0) 26.0 -- 275.0 6.0 7.0 6.0 6.0 98.0 (260.0) (90.0) (37.0) (103.0) 3 Income Statement 4 Annual Standardised in Millions of New Zealand Dollars 2019 2017 2015 5 6 Earnings Quality Score 64 2018 N/A 30-Jun-2018 60 36 7 Period End Date 30-Jun-2019 944.0 2016 37 30-Jun-2016 1,512.0 1,512.0 52.0 30-Jun-2017 1,552.0 1,552.0 45.0 655.0 30-Jun-2015 1,627.0 1,627.0 51.0 944.0 655.0 45.0 52.0 51.0 1,056.0 1,056.0 2,000.0 1,263.0 1,263.0 1,143.0 1,143.0 1,798.0 996.0 996.0 1,597.0 836.0 1,564.0 831.0 1,678.0 955.0 955.0 836.0 831.0 8 Revenue 9 Electric Operations 10 Other Revenue, Total 11 Other Non-Utility Revenue 12 Total Revenue 13 Cost of Revenue, Total 14 Cost of Revenue 15 Fuel Expense 16 Operations & Maintenance 17 Selling/General/Admin. Expenses, Total 18 Labor & Related Expense 19 Research & Development 20 Depreciation/Amortization 21 Depreciation 22 Amortization of Intangibles 42.0 51.0 48.0 45.0 54.0 86.0 87.0 83.0 83.0 82.0 86.0 87.0 83.0 83.0 82.0 204.0 201.0 189.0 182.0 170.0 204.0 201.0 176.0 168.0 170.0 13.0 14.0 64 60 37 36 7 4 Annual Standardised in Millions of New Zealand Dollars 5 2019 2018 2017 2016 2015 6 Earnings Quality Score N/A Period End Date 30-Jun-2019 30-Jun-2018 30-Jun-2017 30-Jun-2016 30-Jun-2015 8 Cash Flow-Operating Activities (NZD Millions) 9 Cash Receipts 1,952.0 1,800.0 1,539.0 1,515.0 1,652.0 10 Cash Payments (1,478.0) (1,232.0) (1,022.0) (1,051.0) (1,168.0) 11 Cash Taxes Paid (79.0) (102.0) (52.0) (89.0) (79.0) 12 Cash Interest Paid (70.0) (92.0) (95.0) (98.0) (101.0) 13 Changes in Working Capital 1.0 2.0 2.0 3.0 5.0 14 Other Operating Cash Flow 1.0 2.0 2.0 3.0 5.0 15 Cash from Operating Activities 326.0 376.0 372.0 280.0 309.0 16 (122.0) (93.0) (29.0) 220.0 0.0 17 Cash Flow-Investing Activities (NZD Millions) 18 Capital Expenditures 19 Purchase of Fixed Assets 20 Purchase/Acquisition of Intangibles 21 Other Investing Cash Flow Items, Total 22 Sale of Fixed Assets 23 Sale/Maturity of Investment 24 Purchase of Investments 25 Sale of Intangible Assets 26 Other Investing Cash Flow 27 Cash from Investing Activities (127.0) (94.0) (33.0) (133.0) 5.0 (123.0) (103.0) (20.0) 33.0 (90.0) (78.0) (12.0) 53.0 47.0 (118.0) (105.0) (13.0)| 15.0 0.0 9.0 0.0 (55.0) (144.0) 26.0 -- 275.0 6.0 7.0 6.0 6.0 98.0 (260.0) (90.0) (37.0) (103.0) 3 Income Statement 4 Annual Standardised in Millions of New Zealand Dollars 2019 2017 2015 5 6 Earnings Quality Score 64 2018 N/A 30-Jun-2018 60 36 7 Period End Date 30-Jun-2019 944.0 2016 37 30-Jun-2016 1,512.0 1,512.0 52.0 30-Jun-2017 1,552.0 1,552.0 45.0 655.0 30-Jun-2015 1,627.0 1,627.0 51.0 944.0 655.0 45.0 52.0 51.0 1,056.0 1,056.0 2,000.0 1,263.0 1,263.0 1,143.0 1,143.0 1,798.0 996.0 996.0 1,597.0 836.0 1,564.0 831.0 1,678.0 955.0 955.0 836.0 831.0 8 Revenue 9 Electric Operations 10 Other Revenue, Total 11 Other Non-Utility Revenue 12 Total Revenue 13 Cost of Revenue, Total 14 Cost of Revenue 15 Fuel Expense 16 Operations & Maintenance 17 Selling/General/Admin. Expenses, Total 18 Labor & Related Expense 19 Research & Development 20 Depreciation/Amortization 21 Depreciation 22 Amortization of Intangibles 42.0 51.0 48.0 45.0 54.0 86.0 87.0 83.0 83.0 82.0 86.0 87.0 83.0 83.0 82.0 204.0 201.0 189.0 182.0 170.0 204.0 201.0 176.0 168.0 170.0 13.0 14.0
