Project Analysis (NPV)
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Brock Klein Corporate Finance (ECO 353) Homework Problem 2 Due 3-11-08 Project Analysis for Sheetbend and Halyard, Inc. Canvas Tote Bags for US Navy WACC (discount rate) 12.00% Machinery (initial investmen ### Plant Refurbishment (initial $ 500,000.00 Book Value of Land $ 10,000.00 Sale Value (opportunity cost $ 600,000.00 Fixed costs $ 300,000.00 Variable costs $ 18.00 Cost Factor 1.04 WC factor 0.1 Tax rate 0.35 Year 1 2 MACRS (Ten year) 10.00% 18.00% MACRS (Five year) 20.00% 32.00% Units 100000 100000 Unit Factor 1 Price 30 30 Price Factor 1 Year 0 1 2 Units 100000 100000 Price $ 30.00 $ 30.00 Revenue ### ### Cost ### ### ### Fixed $(300,000.00) $(312,000.00) Variable ### ### Depreciation $(250,000.00) $(410,000.00) Plant $ (50,000.00) $ (90,000.00) Equipment $(200,000.00) $(320,000.00) Income Before Tax $ 650,000.00 $ 406,000.00 Loss Carry Forward $ - $ - Taxable income $ 650,000.00 $ 406,000.00 Taxes $(227,500.00) $(142,100.00) Net Income After Tax $ 422,500.00 $ 263,900.00 Cash flow from ops ### $ 672,500.00 $ 673,900.00 Initial Cash Flow ### Machinery and Plant ### Working Capital $(300,000.00) $ - $ -
description
Spreadsheet for project analysis with NPV and IRR built in. Allows for basic unit based revenue, fixed/variable costs, depreciation, taxes and loss carry forward.
Transcript of Project Analysis (NPV)
Brock KleinCorporate Finance (ECO 353)Homework Problem 2Due 3-11-08
Project Analysis for Sheetbend and Halyard, Inc.Canvas Tote Bags for US Navy
WACC (discount rate) 12.00%Machinery (initial investment) $ 1,000,000.00 Plant Refurbishment (initial invest $ 500,000.00 Book Value of Land $ 10,000.00 Sale Value (opportunity cost) $ 600,000.00 Fixed costs $ 300,000.00 Variable costs $ 18.00
Cost Factor 1.04WC factor 0.1Tax rate 0.35
Year 1 2MACRS (Ten year) 10.00% 18.00%MACRS (Five year) 20.00% 32.00%
Units 100000 100000Unit Factor 1
Price 30 30Price Factor 1
Year 0 1 2Units 100000 100000Price $ 30.00 $ 30.00
Revenue $ 3,000,000.00 $ 3,000,000.00 Cost $ (1,500,000.00) $ (2,100,000.00) $ (2,184,000.00)
Fixed $ (300,000.00) $ (312,000.00)Variable $ (1,800,000.00) $ (1,872,000.00)
Depreciation $ (250,000.00) $ (410,000.00)Plant $ (50,000.00) $ (90,000.00)Equipment $ (200,000.00) $ (320,000.00)
Income Before Tax $ 650,000.00 $ 406,000.00 Loss Carry Forward $ - $ -
Taxable income $ 650,000.00 $ 406,000.00 Taxes $ (227,500.00) $ (142,100.00)
Net Income After Tax $ 422,500.00 $ 263,900.00
Cash flow from ops $ (1,500,000.00) $ 672,500.00 $ 673,900.00
Initial Cash Flow $ (2,400,000.00)Machinery and Plant $ (1,500,000.00)Working Capital $ (300,000.00) $ - $ -
Opportunity Cost $ (600,000.00)
Terminal Cash flowsSale Value of Land and PlantWC Recapture
Total Cash Flows $ (2,400,000.00) $ 672,500.00 $ 673,900.00 PV of Cash Flows $ (2,400,000.00) $ 600,446.43 $ 537,228.95 PV of all operational CF's $ 2,726,674.31
NPV $ 326,674.31 IRR 12.00%
3 4 5 6 714.40% 11.52% 9.22% 7.37% 6.55%19.20% 11.52% 11.52% 5.76%
100000 100000 100000
30 30 30
3 4 5100000 100000 100000
$ 30.00 $ 30.00 $ 30.00 $ 3,000,000.00 $ 3,000,000.00 $ 3,000,000.00 $ (2,271,360.00) $ (2,362,214.40) $ (2,456,702.98) $ (324,480.00) $ (337,459.20) $ (350,957.57) $ 1,624,896.77 $ (1,946,880.00) $ (2,024,755.20) $ (2,105,745.41) $ (264,000.00) $ (172,800.00) $ (161,300.00) $ 1,258,100.00 $ (72,000.00) $ (57,600.00) $ (46,100.00) $ 184,300.00 $ (192,000.00) $ (115,200.00) $ (115,200.00) $ 464,640.00 $ 464,985.60 $ 381,997.02 $ - $ - $ - $ 464,640.00 $ 464,985.60 $ 381,997.02 $ (162,624.00) $ (162,744.96) $ (133,698.96) $ 302,016.00 $ 302,240.64 $ 248,298.07
$ 566,016.00 $ 475,040.64 $ 409,598.07
$ - $ - $ 300,000.00
$ 1,148,705.00 $ 848,705.00 Sale Value $ 1,500,000.00 $ 300,000.00
$ 566,016.00 $ 475,040.64 $ 1,558,303.07 $ 402,879.01 $ 301,896.91 $ 884,223.01
8 9 10 116.55% 6.56% 7% 3%
WACC (discount rate) 12.00%Machinery (initial investment) $ 1,000,000.00 Plant Refurbishment (initial inv $ 500,000.00 Book Value of Land $ 10,000.00 Sale Value (opportunity cost) $ 600,000.00 Fixed costs $ 300,000.00 Variable costs $ 18.00
Cost Factor 1.04WC factor 0.1Tax rate 0.35
Year 1 2 3MACRS (Ten year) 10.00% 18.00% 14.40%MACRS (Five year) 20.00% 32.00% 19.20%
Units 100000 100000 100000Unit Factor 1
Price 30 30 30Price Factor 1
Year 0 1 2 3Units 100000 100000 100000Price $ 30.00 $ 30.00 $ 30.00
Revenue $ 3,000,000.00 $ 3,000,000.00 $ 3,000,000.00 Cost $ (1,500,000.00) $ (2,100,000.00) $ (2,184,000.00) $ (2,271,360.00)
Fixed $ (300,000.00) $ (312,000.00) $ (324,480.00)Variable $ (1,800,000.00) $ (1,872,000.00) $ (1,946,880.00)
Depreciation $ (250,000.00) $ (410,000.00) $ (264,000.00)Plant $ (50,000.00) $ (90,000.00) $ (72,000.00)Equipment $ (200,000.00) $ (320,000.00) $ (192,000.00)
Income Before Tax $ 650,000.00 $ 406,000.00 $ 464,640.00 Loss Carry Forward $ (1,500,000.00) $ (850,000.00) $ (444,000.00)
Taxable income $ - $ - $ 20,640.00 Taxes $ - $ - $ (7,224.00)
Net Income After Tax $ - $ - $ 13,416.00
Cash flow from ops $ (1,500,000.00) $ 250,000.00 $ 410,000.00 $ 277,416.00
Initial Cash Flow $ (2,400,000.00)Machinery and Plant $ (1,500,000.00)Working Capital $ (300,000.00) $ - $ - $ - Opportunity Cost $ (600,000.00)
Terminal Cash flows
Sale Value of Land and PlantWC Recapture
Total Cash Flows $ (2,400,000.00) $ 250,000.00 $ 410,000.00 $ 277,416.00 PV of Cash Flows $ (2,400,000.00) $ 223,214.29 $ 326,849.49 $ 197,459.23 PV of all operational CF's $ 1,933,642.93
NPV $ (466,357.07)IRR 12.00%
4 5 6 7 8 9 1011.52% 9.22% 7.37% 6.55% 6.55% 6.56% 7%11.52% 11.52% 5.76%
100000 100000
30 30
4 5100000 100000
$ 30.00 $ 30.00 $ 3,000,000.00 $ 3,000,000.00 $(2,362,214.40) $ (2,456,702.98) $ (337,459.20) $ (350,957.57) $ 1,624,896.77 $(2,024,755.20) $ (2,105,745.41) $ (172,800.00) $ (161,300.00) $ 1,258,100.00 $ (57,600.00) $ (46,100.00) $ 184,300.00 $ (115,200.00) $ (115,200.00) $ 464,985.60 $ 381,997.02 $ - $ - $ 464,985.60 $ 381,997.02 $ (162,744.96) $ (133,698.96) $ 302,240.64 $ 248,298.07
$ 475,040.64 $ 409,598.07
$ - $ 300,000.00
$ 1,148,705.00
$ 848,705.00 Sale Value $ 1,500,000.00 $ 300,000.00
$ 475,040.64 $ 1,558,303.07 $ 301,896.91 $ 884,223.01
113%
IRR Analysis (Using Goal Seek) - No Loss Carry Forward
WACC 12%IRR 16.75%Machinery (initial investment) $ 1,000,000.00 Plant Refurbishment (initial inves $ 500,000.00 Book Value of Land $ 10,000.00 Sale Value (opportunity cost) $ 600,000.00 Fixed costs $ 300,000.00 Variable costs $ 18.00
Cost Factor 1.04WC factor 0.1Tax rate 0.35
Year 1 2 3MACRS (Ten year) 10.00% 18.00% 14.40%MACRS (Five year) 20.00% 32.00% 19.20%
Units 100000 100000 100000Unit Factor 1
Price 30 30 30Price Factor 1
Year 0 1 2 3Units 100000 100000 100000Price $ 30.00 $ 30.00 $ 30.00
Revenue $ 3,000,000.00 $ 3,000,000.00 $ 3,000,000.00 Cost $ (1,500,000.00) $ (2,100,000.00) $ (2,184,000.00) $ (2,271,360.00)
Fixed $ (300,000.00) $ (312,000.00) $ (324,480.00)Variable $ (1,800,000.00) $ (1,872,000.00) $ (1,946,880.00)
Depreciation $ (250,000.00) $ (410,000.00) $ (264,000.00)Plant $ (50,000.00) $ (90,000.00) $ (72,000.00)Equipment $ (200,000.00) $ (320,000.00) $ (192,000.00)
Income Before Tax $ 650,000.00 $ 406,000.00 $ 464,640.00 Loss Carry Forward $ - $ - $ -
Taxable income $ 650,000.00 $ 406,000.00 $ 464,640.00 Taxes $ (227,500.00) $ (142,100.00) $ (162,624.00)
Net Income After Tax $ 422,500.00 $ 263,900.00 $ 302,016.00
Cash flow from ops $ (1,500,000.00) $ 672,500.00 $ 673,900.00 $ 566,016.00
Initial Cash Flow $ (2,400,000.00)Machinery and Plant $ (1,500,000.00)Working Capital $ (300,000.00) $ - $ - $ - Opportunity Cost $ (600,000.00)
Terminal Cash flows
Sale Value of Land and PlantWC Recapture
Total Cash Flows $ (2,400,000.00) $ 672,500.00 $ 673,900.00 $ 566,016.00 PV of Cash Flows $ (2,400,000.00) $ 576,002.40 $ 494,378.37 $ 355,651.56 PV of all operational CF's $ 2,400,000.00
NPV $ 0.00 IRR 16.75%
4 5 6 7 8 911.52% 9.22% 7.37% 6.55% 6.55% 6.56%11.52% 11.52% 5.76%
100000 100000
30 30
4 5100000 100000
$ 30.00 $ 30.00 $ 3,000,000.00 $ 3,000,000.00 $ (2,362,214.40) $ (2,456,702.98) $ (337,459.20) $ (350,957.57) $ 1,624,896.77 $ (2,024,755.20) $ (2,105,745.41) $ (172,800.00) $ (161,300.00) $ 1,258,100.00 $ (57,600.00) $ (46,100.00) $ 184,300.00 $ (115,200.00) $ (115,200.00) $ 464,985.60 $ 381,997.02 $ - $ - $ 464,985.60 $ 381,997.02 $ (162,744.96) $ (133,698.96) $ 302,240.64 $ 248,298.07
$ 475,040.64 $ 409,598.07
$ - $ 300,000.00
$ 1,148,705.00
$ 848,705.00 Sale Value $ 1,500,000.00 $ 300,000.00
$ 475,040.64 $ 1,558,303.07 $ 255,657.64 $ 718,310.04
10 117% 3%
IRR Analysis with loss carry forward - (Goal Seek)
WACC 12.00%IRR 5.70%Machinery (initial investment) $ 1,000,000.00 Plant Refurbishment (initial inves $ 500,000.00 Book Value of Land $ 10,000.00 Sale Value (opportunity cost) $ 600,000.00 Fixed costs $ 300,000.00 Variable costs $ 18.00
Cost Factor 1.04WC factor 0.1Tax rate 0.35
Year 1 2 3MACRS (Ten year) 10.00% 18.00% 14.40%MACRS (Five year) 20.00% 32.00% 19.20%
Units 100000 100000 100000Unit Factor 1
Price 30 30 30Price Factor 1
Year 0 1 2 3Units 100000 100000 100000Price $ 30.00 $ 30.00 $ 30.00
Revenue $ 3,000,000.00 $ 3,000,000.00 $ 3,000,000.00 Cost $ (1,500,000.00) $ (2,100,000.00) $(2,184,000.00) $ (2,271,360.00)
Fixed $ (300,000.00) $ (312,000.00) $ (324,480.00)Variable $ (1,800,000.00) $(1,872,000.00) $ (1,946,880.00)
Depreciation $ (250,000.00) $ (410,000.00) $ (264,000.00)Plant $ (50,000.00) $ (90,000.00) $ (72,000.00)Equipment $ (200,000.00) $ (320,000.00) $ (192,000.00)
Income Before Tax $ 650,000.00 $ 406,000.00 $ 464,640.00 Loss Carry Forward $ (1,500,000.00) $ (850,000.00) $ (444,000.00)
Taxable income $ - $ - $ 20,640.00 Taxes $ - $ - $ (7,224.00)
Net Income After Tax $ - $ - $ 13,416.00
Cash flow from ops $ (1,500,000.00) $ 250,000.00 $ 410,000.00 $ 277,416.00
Initial Cash Flow $ (2,400,000.00)Machinery and Plant $ (1,500,000.00)Working Capital $ (300,000.00) $ - $ - $ - Opportunity Cost $ (600,000.00)
Terminal Cash flows
Sale Value of Land and PlantWC Recapture
Total Cash Flows $ (2,400,000.00) $ 250,000.00 $ 410,000.00 $ 277,416.00 PV of Cash Flows $ (2,400,000.00) $ 236,517.30 $ 366,969.23 $ 234,909.29 PV of all operational CF's $ 2,400,000.00
NPV $ (0.00)IRR 5.70%
4 5 6 7 8 9 1011.52% 9.22% 7.37% 6.55% 6.55% 6.56% 7%11.52% 11.52% 5.76%
100000 100000
30 30
4 5100000 100000
$ 30.00 $ 30.00 $ 3,000,000.00 $ 3,000,000.00 $(2,362,214.40) $(2,456,702.98) $ (337,459.20) $ (350,957.57) $ 1,624,896.77 $(2,024,755.20) $(2,105,745.41) $ (172,800.00) $ (161,300.00) $ 1,258,100.00 $ (57,600.00) $ (46,100.00) $ 184,300.00 $ (115,200.00) $ (115,200.00) $ 464,985.60 $ 381,997.02 $ - $ - $ 464,985.60 $ 381,997.02 $ (162,744.96) $ (133,698.96) $ 302,240.64 $ 248,298.07
$ 475,040.64 $ 409,598.07
$ - $ 300,000.00
$ 1,148,705.00
$ 848,705.00 Sale Value $ 1,500,000.00 $ 300,000.00
$ 475,040.64 $ 1,558,303.07 $ 380,559.31 $ 1,181,044.88
113%
