Computation of NPV and IRR:
1) EBIT decline by 10%: |
||||||
Project year |
0 |
1 |
2 |
3 |
4 |
5 |
EBIT |
1,097,126.10 |
2,465,160.30 |
4,270,483.80 |
5,448,230.10 |
6,833,646.90 |
|
Les: tax at 30% |
(329,137.83) |
(739,548.09) |
(1,281,145.14) |
(1,634,469.03) |
(2,050,094.07) |
|
Add: depreciation |
1,760,000.00 |
1,760,000.00 |
1,760,000.00 |
1,760,000.00 |
1,760,000.00 |
|
Net operating cash flows |
2,527,988.27 |
3,485,612.21 |
4,749,338.66 |
5,573,761.07 |
6,543,552.83 |
|
Less: changes in net working capital |
(240,670.00) |
(139,028.00) |
(195,379.00) |
(150,748.00) |
(190,265.00) |
|
Initial investment |
(22,000,000) |
|||||
Terminal value |
21,274,102.00 |
|||||
Free cash flows |
(22,000,000) |
2,287,318.27 |
3,346,584.21 |
4,553,959.66 |
5,423,013.07 |
27,627,389.83 |
discounting factor at 33.257% |
1 |
0.750430 |
0.563145 |
0.422600 |
0.317132 |
0.237985 |
PV at 33.257% |
(22,000,000) |
1,716,471.38 |
1,884,610.88 |
1,924,505.18 |
1,719,810.21 |
6,574,908.25 |
NPV |
(8,179,694) |
|||||
IRR |
18% |
|||||
2) EBIT decline by 20%: |
||||||
Project year |
0 |
1 |
2 |
3 |
4 |
5 |
EBIT |
975,223.20 |
2,191,253.60 |
3,795,985.60 |
4,842,871.20 |
6,074,352.80 |
|
Les: tax at 30% |
(292,566.96) |
(657,376.08) |
(1,138,795.68) |
(1,452,861.36) |
(1,822,305.84) |
|
Add: depreciation |
1,760,000 |
1,760,000 |
1,760,000 |
1,760,000 |
1,760,000 |
|
Net operating cash flows |
2,442,656.24 |
3,293,877.52 |
4,417,189.92 |
5,150,009.84 |
6,012,046.96 |
|
Less: changes in net working capital |
(240,670) |
(139,028) |
(195,379) |
(150,748) |
(190,265) |
|
Initial investment |
(22,000,000) |
|||||
Terminal value |
21,274,102 |
|||||
Free cash flows |
(22,000,000) |
2,201,986.24 |
3,154,849.52 |
4,221,810.92 |
4,999,261.84 |
27,095,883.96 |
discounting factor at 33.257% |
1 |
0.750430 |
0.563145 |
0.422600 |
0.317132 |
0.237985 |
PV at 33.257% |
(22,000,000) |
1,652,435.70 |
1,776,636.52 |
1,784,138.99 |
1,585,425.20 |
6,448,417.75 |
NPV |
(8,752,946) |
|||||
IRR |
17% |
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