Question 2

Figures in $1000s
Sales
COGs
EBITDA
After-tax EBITDA
Forgone rent (after-tax)
Depreciation
Depreciation tax shield
Working cap
Change in WC
Investment in P&E
Asset sale
Capital gains tax
Unlevered CFs

Discounted unlevered CFs

NPV

1
4,200.00
3,780.00
420.00
273.00
(65.00)
120.00
42.00
420.00
(70.00)

2
4,410.00
3,969.00
441.00
286.65
(67.60)
120.00
42.00
441.00
(21.00)

(1,550.00)

180.00

240.05

(1,550.00)
85.80

160.71

191.37

350.00
(350.00)
(1,200.00)

Book value of P&E

Capital gains tax

240
56

Figures in millions

Question 3

Sales
Operating expenses
EBITDA
After-tax EBITDA
Depreciation
Dep. tax shield
Investment in furnace
Salvage value

1
150.00
10.00
140.00
91.00
125.00
43.75

(1,000.00)

2
150.00
10.00
140.00
91.00
125.00
43.75

Tax-credit
Opp. cost of old furnace sale (after-tax)
WC
WC requirements
Unlevered CFs

(30.00)
20.00
(20.00)
(1,050.00)

Discounted unlevered CFs

NPV

(1,050.00)
(199.61)

20.00
134.75

20.00
134.75

122.50

111.36

3
4,630.50
4,167.45
463.05
300.98
(70.30)
120.00
42.00
463.05
(22.05)

4
4,862.03
4,375.82
486.20
316.03
(73.12)
120.00
42.00
486.20
(23.15)

5
5,105.13
4,594.61
510.51
331.83
(76.04)
120.00
42.00
510.51
(24.31)

6
5,360.38
4,824.34
536.04
348.42
(79.08)
120.00
42.00
536.04
(25.53)

7
5,628.40
5,065.56
562.84
365.85
(82.25)
120.00
42.00
562.84
(26.80)

8
5,909.82
5,318.84
590.98
384.14
(85.54)
120.00
42.00
562.84

250.63

261.76

273.48

285.82

298.80

400.00
(56.00)
1,247.44

178.39

166.36

155.18

144.80

135.16

503.82

3
150.00
10.00
140.00
91.00
125.00
43.75

4
150.00
10.00
140.00
91.00
125.00
43.75

5
150.00
10.00
140.00
91.00
125.00
43.75

6
150.00
10.00
140.00
91.00
125.00
43.75

7
150.00
10.00
140.00
91.00
125.00
43.75

8
150.00
10.00
140.00
91.00
125.00
43.75

9
150.00
10.00
140.00
91.00

20.00
134.75

20.00
134.75

20.00
134.75

20.00
134.75

20.00
134.75

20.00
134.75

20.00
91.00

101.24

92.04

83.67

76.06

69.15

62.86

38.59

10
150.00
10.00
140.00
91.00

200.00

(70.00)
20.00
241.00
92.92