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What is the incremental cash flow for the following Project and how is it obtained ? Annual cost Life of project in years Required rate
What is the incremental cash flow for the following Project and how is it obtained ?
Annual cost Life of project in years Required rate of return Earlier Annual sales Earlier Cost of Sales (60% of sales) Increase in sales and revenue per year Tax rate Marketing / Advertising cost Present value of Annual marketing cost Annual sales Cost of the Goods sold Earnings before interest and taxes (EBIT) Taxes (25%) Earnings after taxes Cash Flows Present value factor (10%) Present value of cash flows Cummulative Cash flows Present value of cash inflows Present value of cash outflows Net Present Value = Present Value of cash inflows - Present value of cash outflows internal rate of return Payback periodd Profitability Index = present value of cash inflows/ present value of cash outflows 15% 25% $42,181,425 0.91 ($1,810,521) $26,450,000 0.83 Formula: $30,417,500 $3,041,750 $9,125,250 $9,125,250 0.75 $15,249,729 $33,470,904 90.36% 1.23 $13,992,050 $7,167,569 $25,743,766 $40,227,144 $24,136,286 $12,068,143 $12,068,143 $7,493,367 $46,261,215 $27,756,729 $4,626,122 $13,878,365 $13,878,365 $7,833,975
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