Profit = (revenues-sales)*(1-switch%) |
=(8890000-2160000)*(1-0.12) |
=5922400 |
Time line | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | |
Cost of new machine | -27000000 | |||||||||||
Initial working capital | -1010000 | |||||||||||
=Initial Investment outlay | -28010000 | |||||||||||
Profits | 5922400 | 5922400 | 5922400 | 5922400 | 5922400 | 5922400 | 5922400 | 5922400 | 5922400 | 5922400 | ||
-Depreciation | (Cost of equipment-salvage value)/no. of years | -2600000 | -2600000 | -2600000 | -2600000 | -2600000 | -2600000 | -2600000 | -2600000 | -2600000 | -2600000 | |
=Pretax cash flows | 3322400 | 3322400 | 3322400 | 3322400 | 3322400 | 3322400 | 3322400 | 3322400 | 3322400 | 3322400 | ||
-taxes | =(Pretax cash flows)*(1-tax) | 2392128 | 2392128 | 2392128 | 2392128 | 2392128 | 2392128 | 2392128 | 2392128 | 2392128 | 2392128 | |
+Depreciation | 2600000 | 2600000 | 2600000 | 2600000 | 2600000 | 2600000 | 2600000 | 2600000 | 2600000 | 2600000 | ||
=after tax operating cash flow | 4992128 | 4992128 | 4992128 | 4992128 | 4992128 | 4992128 | 4992128 | 4992128 | 4992128 | 4992128 | ||
reversal of working capital | 1010000 | |||||||||||
+Proceeds from sale of equipment after tax | =selling price* ( 1 -tax rate) | 720000 | ||||||||||
+Tax shield on salvage book value | =Salvage value * tax rate | 280000 | ||||||||||
=Terminal year after tax cash flows | 2010000 | |||||||||||
Total Cash flow for the period | -28010000 | 4992128 | 4992128 | 4992128 | 4992128 | 4992128 | 4992128 | 4992128 | 4992128 | 4992128 | 7002128 | |
Discount factor= | (1+discount rate)^corresponding period | 1 | 1.127125311 | 1.270411467 | 1.43191292 | 1.6139453 | 1.8191186 | 2.0503746 | 2.31102912 | 2.6048194 | 2.935958 | 3.309192 |
Discounted CF= | Cashflow/discount factor | -28010000 | 4429079.847 | 3929536.32 | 3486334.91 | 3093120.9 | 2744256.5 | 2434739.5 | 2160132.019 | 1916496.8 | 1700340 | 2115963 |
NPV= | Sum of discounted CF= | 0.00 | ||||||||||
IRR is discount rate at which NPV = 0 = | 12.7125% |
unanswered not submitted Caspian Sea Drinks is considering the production of a diet drink. The expansion...
#3 unanswered not_submitted Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $23.00 million. The plant and equipment will be depreciated over 10 years to a book value of $3.00 million, and sold for that amount in year 10. Net working capital will increase by $1.43 million at the beginning of the project and will be recovered at the...
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $27.00 million. The plant and equipment will be depreciated over 10 years to a book value of $2.00 million, and sold for that amount in year 10. Net working capital will increase by $1.34 million at the beginning of the project and will be recovered at the end. The new...
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $28.00 million. The plant and equipment will be depreciated over 10 years to a book value of $3.00 million, and sold for that amount in year 10. Net working capital will increase by $1.31 million at the beginning of the project and will be recovered at the end. The new...
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $26.00 million. The plant and equipment will be depreciated over 10 years to a book value of $1.00 million, and sold for that amount in year 10. Net working capital will increase by $1.29 million at the beginning of the project and will be recovered at the end. The new...
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $28.00 million. The plant and equipment will be depreciated over 10 years to a book value of $3.00 million, and sold for that amount in year 10. Net working capital will increase by $1.31 million at the beginning of the project and will be recovered at the end. The new...
1.Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $27.00 million. The plant and equipment will be depreciated over 10 years to a book value of $3.00 million, and sold for that amount in year 10. Net working capital will increase by $1.05 million at the beginning of the project and will be recovered at the end. The new...
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $22.00 million. The plant and equipment will be depreciated over 10 years to a book value of $3.00 million, and sold for that amount in year 10. Net working capital will increase by $1.25 million at the beginning of the project and will be recovered at the end. The new...
unanswered not_submitted Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $26.00 million. The plant and equipment will be depreciated over 10 years to a book value of $1.00 million, and sold for that amount in year 10. Net working capital will increase by $1.19 million at the beginning of the project and will be recovered at the end....
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $27.00 million. The plant and equipment will be depreciated over 10 years to a book value of $1.00 million, and sold for that amount in year 10. Net working capital will increase by $1.07 million at the beginning of the project and will be recovered at the end. The new...
Caspian Sea Drinks is considering the production of a diet drink. The expansion of the plant and the purchase of the equipment necessary to produce the diet drink will cost $24.00 million. The plant and equipment will be depreciated over 10 years to a book value of $2.00 million, and sold for that amount in year 10. Net working capital will increase by $1.37 million at the beginning of the project and will be recovered at the end. The new...