Increase in

Sales by
15%
increse in
units by 15%
increased
varaible cost
Sales with
15% increase
Fixed Cost
Depreciation

Ye
ar

1500 (1+ .
15)

1725*15
25875
90000(1+
015)
103500
5000
Cost of
plant/economic life
120000/3
40000

Initial
Investm working
ant
Capital
0 -120,000
1
2
3

1725

Varibal
e Cost

source

Fixe
d
Cost

Deprecia
tion

operati
ong
Cash
flow
(SalesVC-FCDep)

Cash flow
after tax
(Op Cash
flow*0.70 +
Dep)

40000
40000
40000

32625
32625
32625

62837.5
62837.5
77837.5

discou
nt
factor
14%

PV of
cash
flow

-15000

15000

25875
25875
25875

5000
5000
5000

0.8772
0.7695
0.675

55121.06
48353.46
52540.31
156014.8

Initial
Investment
(120000+15
000)
NPV(pv of
cash flowsinitial
invest)

135000
21014.8
2

with 15%
decrease in
sales
change in
units
change in
Variable cost
sales with
15% decrease

Ye
ar

1500(1-.1
5)
no. of
units*per
unit
90000(10.15)

Initial
Investm working
ant
Capital
0 -120,000
1
2

1275
19125
76500

Varibal
e Cost

Fixe
d
Cost

Deprecia
tion

operati
ong
Cash
flow
(SalesVC-FCDep)

Cash flow
after tax
(Op Cash
flow*0.70 +
Dep)

40000
40000

12375
12375

48662.5
48662.5

discou
nt
factor
14%

PV of
cash
flow

-15000
19125
19125

5000
5000

0.8772
0.7695

42686.75
37445.79

15000

19125

5000

40000

12375

63662.5

0.675

42972.19
123104.7

Initial
Investment
(120000+15
000)

135000

NPV(pv of
cash flowsinitial
invest)

11895.3

Wth 15% increase in

Variable Cost

increase in Variable cost by

15%
TOTAL
Variable Cost
Sale remians
same
Fixed Cost
Ye
Initial
working
ar
Investm Capital
ant

15
(1+.15)
1500*17
.25

Varibal
e Cost

17.25
25875

Fixe
d
Cost

90000
5000
Deprecia operati
tion
ong
Cash
flow

Cash flow
after tax
(Op Cash
flow*0.70 +

discou
nt
factor
14%

PV of
cash
flow

(SalesVC-FCDep)
0 -120,000
1
2
3

Dep)

-15000
25875
25875
25875

15000

5000
5000
5000

40000
40000
40000

19125
19125
19125

53387.5
53387.5
68387.5

0.8772
0.7695
0.675

46831.52
41081.68
46161.56
134074.8

With 15% decrease in

Variable Cost

decrease in Variable cost

15

12.75

Initial
Investment
(120000+15
000)

135000

NPV(pv of
cash flowsinitial
invest)

925.241

by 15%
TOTAL
Variable Cost
Sale remians
same
Fixed Cost

Ye
ar

(1-.15)
1500*17
.25

90000
5000

Initial
Investm working
ant
Capital
0 -120,000
1
2
3

19125

Varibal
e Cost

Fixe
d
Cost

Deprecia
tion

operati
on
Cash
flow
(SalesVC-FCDep)

Cash flow
after tax
(Op Cash
flow*0.70 +
Dep)

40000
40000
40000

25875
25875
25875

58112.5
58112.5
73112.5

discou
nt
factor
14%

PV of
cash
flow

-15000

15000

19125
19125
19125

5000
5000
5000

0.8772
0.7695
0.675

50976.29
44717.57
49350.94
145044.8

Initial
Investment
(120000+15
000)
NPV(pv of
cash flowsinitial

135000
10044.7
9

invest)