Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Sale/Revenue
2,000,000
2,400,000
3,000,000
3,500,000
4,000,000
2,400,000
Production Costs ( Revenue*22%) 440,000 528,000 660,000 770,000 880,000 528,000
Depreciation
(6000000/6)
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
EBIT
(Sales- Cost-Depreciation)
560,000
872,000
1,340,000
1,730,000
2,120,000
872,000
Tax
(EBIT*20%)
112,000
174,400
268,000
346,000
424,000
174,400
Net income
(EBIT-Taxes)
448,000
697,600
1,072,000
1,384,000
1,696,000
697,600
OCF
(Net income + Depreciation)
1,448,000
1,697,600
2,072,000
2,384,000
2,696,000
1,697,600
Purchase of FA
6,000,000
Aftertax salvage
= (600000*(1-20%))
480,000
NCS 6,000,000$ -$ -$ -$ -$ -$ (480,000)$
Net working capital (NWC) = Sale of the
next year x 10% 200,000 240,000 300,000 350,000 400,000 240,000 -
Change in NWC
(200,000)
(40,000)
(60,000)
(50,000)
(50,000)
160,000
240,000
-
-
Oppourtunity cost of assets
CFFA
(6,200,000)
$
1,408,000
$
1,637,600
$
2,022,000
$
2,334,000
$
2,856,000
$
2,417,600
$
NPV@10%
2,684,723.83
$
IRR
22%
IRR= 0.22 = 22%
NPV = -6,200,000 + ($1,408,000/1,10) + ($1,637,600/1,10^2) + (2,022,000/1,10^3) + ($2,334,000/1,10^4) + ($2,856,000/1,10^5) + ($2,417,600/1,10^6) = $ 2,684,723.83
0 = - 5,800,000 + ($1,408,000/(1+ IRR)) + ($1,637,600/(1+ IRR)^2)) + (2,022,000/(1+ IRR)^3)) + ($2,334,000/(1+ IRR)^4)) + ($2,856,000/(1+ IRR)^5)) + ($2,417,600/(1+ IRR)^6))
