GOODWEEK TIRES, INC.

Investment

$140,000,000

year
1
2
3
4
Cost
Less: Accumulated Depreciation
Remaining Book Value
Selling Price
Less: Remaining Book Value
Capital Gain
Less: Capital Gain Tax At
After Tax Cash Flow From Sale of Assets

40%

SuperTread price/unit in OEM market (year 1)

SuperTread price/unit in Replacement market (year 1)
SuperTread cost/unit (year 1)
Year 1 marketing and admin costs
Annual inflation rate
Corporate Tax rate
Year 1 OEM Market for SuperTread (5.6 million new cars x 4 tires/car)
OEM Market growth

Depreciation
25.00%
$35,000,000
25.00%
$35,000,000
25.00%
$35,000,000
25.00%
$35,000,000

R.B.Value
$105,000,000
$70,000,000
$35,000,000
$0
$140,000,000
$140,000,000
$0
$54,000,000
$0
$54,000,000
$21,600,000
$32,400,000

$38.00
$59.00
$22.00
$26,000,000
3.25%
40.00%
22,400,000
2.50%

SuperTread share of OEM market

Year 1 Replacement Market for SuperTread
Replacement Market growth
SuperTread share of Replacement market

11.00%
14,000,000
2.00%
8.00%

Year
2

OEM Market
Units
Price (Per Unit)
Total Sales revenue from OEM Market

2464000
$38.00
$93,632,000

2525600
$39.62
$100,051,644

2588740
$41.30
$106,911,435

Replacement Market
Units
Price (Per Unit)
Total Sales revenue from Replacement Market

1120000
$59.00
$66,080,000

1142400
$61.51
$70,266,168

1165248
$64.12
$74,717,530

Total Sales Revenue from OEM & Replacement Market

$159,712,000

$170,317,812

$181,628,965

Variable Costs
Units (OEM + Replacement)
Cost (Per Unit)
Total Variable Costs

3584000
$22.00
$78,848,000

3668000
$22.94
$84,125,580

3753988
$23.91
$89,756,868

1
$23,956,800
-$14,956,800

Year
2
$25,547,672
-$1,590,872

3
$27,244,345
-$1,696,673

Working capital

NWC

0
$9,000,000
-$9,000,000

1
$159,712,000
$78,848,000

Year
2
$170,317,812
$84,125,580

3
$181,628,965
$89,756,868

$80,864,000
$26,000,000

$86,192,232
$26,845,000

$91,872,097
$27,717,463

$54,864,000
$35,000,000

$59,347,232
$35,000,000

$64,154,634
$35,000,000

Less: Tax

$19,864,000
$7,945,600

$24,347,232
$9,738,893

$29,154,634
$11,661,854

Net Income

$11,918,400

$14,608,339

$17,492,781

$35,000,000
-$1,590,872

$35,000,000
-$1,696,673

0
Sales Revenue
Less: COGS

Gross Profit
Less: Marketing & General Administrative Expense

EBDT
Less: Depreciation

EBT

Investment
Add: Depreciation
NWC

-$140,000,000
-$9,000,000

$35,000,000
-$14,956,800

NCF

-$149,000,000

$31,961,600

$48,017,467

$50,796,108

$27,576,877

$35,746,406

$32,627,224

Discount Rate
Discounted Cash Flow

15.90%
IRR =
14.3630%
NPV = -$5,290,997.79
PI =
0.96
PAYBACK PERIOD
Cash Ouflow
Cash Inflow
$149,000,000

Uncovered

Year 1
Year 2
Year 3
Year 4

$31,961,600
$48,017,467
$50,796,108
$86,175,613

Paypack Period

Year 1
Year 2
Year 3
Year 4

$117,038,400
$69,020,933
$18,224,825
-$67,950,789

3.211 Years

DISCOUNTED PAYBACK PERIOD

Cash Ouflow
Cash Inflow
Uncovered
$149,000,000
$27,576,877
$121,423,123
$35,746,406
$85,676,718
$32,627,224
$53,049,494
$47,758,496
$5,290,998

Discounted Paypack Period is > 4 Years

4
2653459
$43.05
$114,241,550

1188553
$66.85
$79,450,885
$193,692,435

3842011
$24.93
$95,765,599

4
$29,053,865
-$1,809,521

4
$193,692,435
$95,765,599
$97,926,837
$28,618,280
$69,308,557
$35,000,000
$34,308,557
$13,723,423
$20,585,134
$32,400,000
$35,000,000
-$1,809,521
$86,175,613

$47,758,496