vallavits Car 50000.00 Equipment. 100000.00 Land 45000.00 Total investment 195000.00 Mango price R2E2* per ton 2000.00 R2E2* production (ton) 15.00 Mango price KP* per ton 1800.00 KP* production (ton) 40.00 Annual Revenue 102000.00 Annual Operating Cost 40000.00 Loan 75000.00 Loan Interest % 5.00% Depreciation p.a. 10.00% Conversion unit 1000.00 Profit Tax 25.00% *R2E2 and KP are varieties of mangos. Your analysis is in the following spreadsheet. 312001.xlsx You found an IRR on equity of 0.88%. 1. Assuming the company requires an IRR on equity of at least 5%. What is the maximum profit tax the company can afford to pay under the current circumstances? Maximum profit tax = 2. Unfortunately for the company, the tax rate is fixed at 25%. Consequently, the firm would like to know the minimum production of R2E2 that would be required to achieve their 5% IRR goal? Minimum required production of R2E2 = tonnes Variables Car Equipment Land Total investment Mango price R2E2 per ton R2E2 production (ton) Mango price KP per ton KP production (ton) Annual Revenue Annual Operating Cost Loan Loan Interest % Depreciation p.a. Conversion unit Profit Tax 50000.00 100000.00 45000.00 195000.00 2000.00 15.00 1800.00 40.00 102000.00 40000.00 75000.00 5.00% 10.00% 1000.00 25.00% $ thousand dollars Annual Revenue Investment Cost Operating Cost Net Cash Flow Before Tax & Finance Financing Loan Repayment Net Cash Flow After Finance (equity) Taxes Annual Revenue Depreciation Interest on Loan Profits (before tax) Taxes Liable Net Cash Flow After Tax Internal Rate of Return 2 3 4 5 H H H H HHH H H H H H H -$40.00 - $ 40.00 $ 62.00 -$ 40.00 $ 62.00 -$40.00 $ 62.00 $ 62.00 -$ 17.32 $ 44.68 -$17.32 -$ 17.32 $44.68 $44.68 -$ 17.32 $44.68 ###### ###### ###### ###### ###### -$19.50 -$19.50 -$19.50 -$19.50 - $ 19.50 -$ 3.75 -$ 3.07 -$2.36 -$ 1.61 - $ 0.82 $78.75 $79.43 $ 80.14 $ 80.89 $81.68 -$ 19.69 -$ 19.86 - $ 20.04 -$20.22 $ 20.42 $ 24.82 $24.64 $24.45 $24.26 Year O 1 #H -$ 40.00 $ 62.00 ####### $ 75.00 -$ 17.32 ####### $44.68 ####### $ 24.99 0.88% vallavits Car 50000.00 Equipment. 100000.00 Land 45000.00 Total investment 195000.00 Mango price R2E2* per ton 2000.00 R2E2* production (ton) 15.00 Mango price KP* per ton 1800.00 KP* production (ton) 40.00 Annual Revenue 102000.00 Annual Operating Cost 40000.00 Loan 75000.00 Loan Interest % 5.00% Depreciation p.a. 10.00% Conversion unit 1000.00 Profit Tax 25.00% *R2E2 and KP are varieties of mangos. Your analysis is in the following spreadsheet. 312001.xlsx You found an IRR on equity of 0.88%. 1. Assuming the company requires an IRR on equity of at least 5%. What is the maximum profit tax the company can afford to pay under the current circumstances? Maximum profit tax = 2. Unfortunately for the company, the tax rate is fixed at 25%. Consequently, the firm would like to know the minimum production of R2E2 that would be required to achieve their 5% IRR goal? Minimum required production of R2E2 = tonnes Variables Car Equipment Land Total investment Mango price R2E2 per ton R2E2 production (ton) Mango price KP per ton KP production (ton) Annual Revenue Annual Operating Cost Loan Loan Interest % Depreciation p.a. Conversion unit Profit Tax 50000.00 100000.00 45000.00 195000.00 2000.00 15.00 1800.00 40.00 102000.00 40000.00 75000.00 5.00% 10.00% 1000.00 25.00% $ thousand dollars Annual Revenue Investment Cost Operating Cost Net Cash Flow Before Tax & Finance Financing Loan Repayment Net Cash Flow After Finance (equity) Taxes Annual Revenue Depreciation Interest on Loan Profits (before tax) Taxes Liable Net Cash Flow After Tax Internal Rate of Return 2 3 4 5 H H H H HHH H H H H H H -$40.00 - $ 40.00 $ 62.00 -$ 40.00 $ 62.00 -$40.00 $ 62.00 $ 62.00 -$ 17.32 $ 44.68 -$17.32 -$ 17.32 $44.68 $44.68 -$ 17.32 $44.68 ###### ###### ###### ###### ###### -$19.50 -$19.50 -$19.50 -$19.50 - $ 19.50 -$ 3.75 -$ 3.07 -$2.36 -$ 1.61 - $ 0.82 $78.75 $79.43 $ 80.14 $ 80.89 $81.68 -$ 19.69 -$ 19.86 - $ 20.04 -$20.22 $ 20.42 $ 24.82 $24.64 $24.45 $24.26 Year O 1 #H -$ 40.00 $ 62.00 ####### $ 75.00 -$ 17.32 ####### $44.68 ####### $ 24.99 0.88%