Use a speadsheet to show your derivation of: Operating Cash Flows, Incremental Cash Flows (including investment and salvage), Warranty costs, WACC, NPV, IRR, Payback, and Profitability Index
Exhibit 1: Sales and Cost Forecast The sales forecast is based on projected levels of demand. All the numbers are expressed in today's dollars. The forecasted average inflation per year is 3.0% Price per bus Units sold per vear Labor cost per bus Components& Parts $95,000 $220,000 11,000 $50,000 er bus Selling General & Administrative fixed NOTE: Average warranty cost per year per bus for the first five years is $1,000. The present value of this cost will be used as a cost figure for each bus. Afterwards, the bus operator will become responsible the repairs on the buses The buses can be produced for twenty years. Afterwards, the designs become obsolete $250,000,000 Engine choices Los Angeles engines $25,000 California engines $15,000 $2,000 Engine Price per engine, including installation Average annual warranty cost per year for five $500 years. Afterwards, the bus operator will become responsible for the repairs on the buses.* The chosen engine will be installed in every bus and will become a cost figure for each bus NOTE: The engine manufacturers are not providing California Best Trucks with any warranty. However, California Best Trucks will provide a warranty to its customers. After the initial five years, the bus operators may purchase an extended warranty from any insurance company that offers such packages Exhibit 1: Sales and Cost Forecast The sales forecast is based on projected levels of demand. All the numbers are expressed in today's dollars. The forecasted average inflation per year is 3.0% Price per bus Units sold per vear Labor cost per bus Components& Parts $95,000 $220,000 11,000 $50,000 er bus Selling General & Administrative fixed NOTE: Average warranty cost per year per bus for the first five years is $1,000. The present value of this cost will be used as a cost figure for each bus. Afterwards, the bus operator will become responsible the repairs on the buses The buses can be produced for twenty years. Afterwards, the designs become obsolete $250,000,000 Engine choices Los Angeles engines $25,000 California engines $15,000 $2,000 Engine Price per engine, including installation Average annual warranty cost per year for five $500 years. Afterwards, the bus operator will become responsible for the repairs on the buses.* The chosen engine will be installed in every bus and will become a cost figure for each bus NOTE: The engine manufacturers are not providing California Best Trucks with any warranty. However, California Best Trucks will provide a warranty to its customers. After the initial five years, the bus operators may purchase an extended warranty from any insurance company that offers such packages
