IM&C GUANO PROJECT

The following worksheet contains the same information as Tables 6-2 through 6-7 in Brealey-Myers.
You can use this worksheet as a template for most capital budgeting problems.
Cost of capital
Year
Depreciation (for taxes)
Net working capital
Change in net working capital
Net property, plant & equipment

20%
0

10,000

20.00%
550
550
8,000

32.00%
1,289
739
4,800

19.20%
3,261
1,972
2,880

11.52%
4,890
1,629
1,728

11.52%
3,583
(1,307)
576

5.76%
2,002
(1,581)
-

Sales
Less COGS
Less depreciation
Less other costs

(4,000)

523
(837)
(2,000)
(2,200)

12,887
(7,729)
(3,200)
(1,210)

32,610
(19,552)
(1,920)
(1,331)

48,901
(29,345)
(1,152)
(1,464)

35,834
(21,492)
(1,152)
(1,611)

19,717
(11,830)
(576)
(1,772)

EBIT
Less taxes @ 35%

(4,000)
1,400

(4,514)
1,580

748
(262)

9,807
(3,432)

16,940
(5,929)

11,579
(4,053)

5,539
(1,939)

EBIAT
(2,600)
Plus depreciation
Less change in net working capital
-

(2,934)
2,000
(550)

486
3,200
(739)

6,375
1,920
(1,972)

11,011
1,152
(1,629)

7,526
1,152
1,307

3,600
576
1,581

2,002

Cash flow from operations

Less capital investment
Plus capital disposal
Less taxes on capital disposal

(2,600)
(10,000)
-

(1,484)
-

2,947
-

6,323
-

10,534
-

9,985
-

5,757
-

2,002
1,949
(682)

Net cash flow

Present value factor
PV of cash flow
Cumulative PV
Net present value

(12,600)
100%
(12,600)
(12,600)
3,802

(1,484)
83%
(1,237)
(13,837)

2,947
69%
2,047
(11,790)

6,323
58%
3,659
(8,131)

10,534
48%
5,080
(3,051)

9,985
40%
4,013
962

5,757
33%
1,928
2,890

3,269
28%
912
3,802

(2,002)