Question

You are a manager at Percolated Fiber, which is considering expanding its operations in synthetic fiber manufacturing. Your boss comes into your office, drops a consultant's report on your desk, and complains, "We owe these consultants $1.6 million for this report, and I am not sure their analysis makes sense. Before we spend the $15 million on new equipment needed for this project, lobk it over and give me your opinion." You open the report and find the following estimates (in millions of dollars)

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

PE EPS, STOCK DIVIDEND - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins - 2x % Cut Σ AutoSum : A Calibri 11 A A = = = V Wrap Text General Ea Copy Fill 2 Paste B Format Painter I U B- A Merge & Center - $ -% Sort & Find & . Formatting as Table Styles 2 Clear Filter Select Clipboard Font Alignment Number Styles Cells Editing HD112 GU GV GW GX GYGZ HAHB HC HD HE HE HGHH 94 FCF CALCULATIONS 95 FCF CALCULATIONS YEARS ------------- 0 1 TO 9 10 96 NET INCOME 5.005 5.005 97 ADD OVERHEAD (AFTER TAX @35%) 0.39 0.39 (1.2*50%*(1-0.35)) TAX RATE = 2.695/7.7 = 35% 98 ADD DEPRECIATION 1.5 1.5 99 INVESTMENT IN FIXED ASSETS -15.000 100 INCREASE IN WORKING CAPITAL -13.000 RECOVERY WORKING CAPITAL 13.000 FREE CASH FLOW (FCF) -28.000 6.895 19.895 103 104 FCF FOR YEAR O = -28.000 105 FCF FOR YEAR 1 TO 9 = 6.895 106 FCF FOR YEAR 10 = 19.895 EXCEL 107 PVIFA @8%, 9 YEARS 6.246888 108 NPV = PV OF ALL CFAT - INVESTMENT PVIF @8%, 10 YEARS 0.463193 109 (6.895 X PVIFA@8%, 9 YEARS) + (19.895 X PVIF@8%,10 YEARS) - 28 110 (6.895 X 6.246888) + (19.895 X 0.463193) - 28 111 VALUE = 24.288 MILLION 112 113 YES, YOU SHOULD ACCCEPT THE PROJECT 114 H HIGH LOW TARGET PRICE STOCK DIV NAV HEDGE FUND ME EV PE EPS DIV ABNORMAL deberk MARGIN MONEY marginal tax PB ROPI APV ROSS price quote EVA MVAI Rea 1 ferences BO! 120% - ELEB * 10 ENG 31-10-2019 101 102 1 a e 9 55 x w

Answer 2

How do you calculate the income?