Project Managemnt Assignment-Ross.xlsx
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Initial Cash Outflow New Equipment Purchased 16500000 Operating Cash flows year 1 year 2 year 3 year 4 Sales Volume 70000 80000 100000 85000 Per Unit Sale Price 340 340 340 340 Estimated Sales Amount 70000 x 340 23800000 80000 x 340 27200000 100000 x 340 34000000 85000 x 340 28900000 Less Externaility Adjustment 5000000 4200000 0 0 less Adjusted Sales 18800000 23000000 34000000 28900000 Variable Cost (p.u) 150 150 150 150 Total Variable Cost 10500000 12000000 15000000 12750000 Fixed Cost 4500000 4500000 4500000 4500000 Gross Income 3800000 6500000 14500000 11650000 Depreciation 3300000 3300000 3300000 3300000 Earning Before Tax 500000 3200000 11200000 8350000 Tax 175000 1120000 3920000 2922500 x Earning After Tax 325000 2080000 7280000 5427500 add Depreciation Sheild 3300000 3300000 3300000 3300000 Net Cash Flows for the Year 3625000 5380000 10580000 8727500 Net Working Capital @ 20 % of sales 4760000 5440000 6800000 5780000 Adjusted Working Capital 4760000 680000 1360000 -1020000 Net Operating Cash flows -1135000 4700000 9220000 9747500 Externality Adjustment Add Back WC Year 1 total sales before Project 80000 x 280 22400000 Net CF ( Year 5) total sales after Project 65000 x 240 15600000 Externality Amount 6800000 Variable Cost Savings Cost of Products before project 80,000x120 9600000 Cost of Products after project 65,000 x 120 7800000 Variable Cost Savings 1800000 Net Externality Adjustment 5000000 Year 2 toatl sales before Project 60000 x 280 16800000
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This document is actually a solution of the PDA project
Transcript of Project Managemnt Assignment-Ross.xlsx
2nd AssignmentInitial Cash OutflowNew Equipment Purchased16500000
Operating Cash flows
year 1 year 2 year 3 year 4 year 5 Sales Volume70000800001000008500075000Per Unit Sale Price340340340340340Estimated Sales Amount 70000 x 3402380000080000 x 34027200000100000 x 3403400000085000 x 3402890000075000 x 34025500000Less Externaility Adjustment50000004200000000lessAdjusted Sales1880000023000000340000002890000025500000Variable Cost (p.u)150150150150150Total Variable Cost1050000012000000150000001275000011250000Fixed Cost 45000004500000450000045000004500000Gross Income 3800000650000014500000116500009750000Depreciation33000003300000330000033000003300000Earning Before Tax50000032000001120000083500006450000Tax1750001120000392000029225002257500x Earning After Tax3250002080000728000054275004192500add Depreciation Sheild33000003300000330000033000003300000Net Cash Flows for the Year362500053800001058000087275007492500Net Working Capital @ 20 % of sales47600005440000680000057800005100000Adjusted Working Capital47600006800001360000-1020000-680000Net Operating Cash flows -11350004700000922000097475008172500Externality Adjustment Add Back WC5100000Year 1total sales before Project 80000 x 280 22400000Net CF ( Year 5)13272500total sales after Project 65000 x 24015600000Externality Amount 6800000
Variable Cost SavingsCost of Products before project80,000x1209600000Cost of Products after project65,000 x 1207800000Variable Cost Savings1800000Net Externality Adjustment5000000
Year 2 toatl sales before Project 60000 x 28016800000toatl sales after Project 45000 x 24010800000Externality Amount 6000000Variable Cost SavingsCost of Products before project60,000x1207200000Cost of Products after project45,000 x 1205400000Variable Cost Savings1800000Net Externality Adjustment4200000
Depreciation of Manufacturing Plant
Working Depreciation on Assumption Straight Line Methood with no residual value
Per Year Depreciation1650000033000005
Years CFAd. C.F.PV @ 12%PV @ 25%P.B. PeriodP.B. Period0-16500000-17513392.8571429-17513392.8571429-17513392.85714291-11350000002470000047000003746811.2244898300800047000003922000092200007350127.551020414720640139200004974750097475007770647.321428573992576236675003.22Years5132725001327250010580755.73979594349132.8Net Cash Flows11934948.9795918-1443044.05714286
Thus, NPV at Required Rate Of Return of 12% is11934948.9795918Therefore, the project should be accepted
12%25%NPV11934948.9795918-1443044.05714286
MIRR (by using Dis. App.)23.60%
