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Calculations of PayBack Period, ARR, NPV and IRR for l

Total Investment
Less Woking Capital requirements
Total
Less short term investment
Long term debt requirements

95
15
80
40
40

WACC
Equity
Debt
Total Cost
WACC

Paybank Period
ARR (Average Cashflows/ Initial
Investment)

Financing
40
40

Interest Rate
20%
12%

Cost
8
4.8
12.8

16%

Year Net cash Flow Accumulated CF


1
17.3
17.3
2
24
41.3
3
29.5
70.8
4
32.5
103.3
5
38
141.3
6
41
182.3
7
46.1
228.4
8
49.5
277.9
9
55.4
333.3
10
60
393.3
3.69

49.16

Net Present Value:


Years
1
2
3
4
5
6
7
8
9
10
Present Value
Less: Initial Investment
Net Present Value
Internal Rate of Return

35%

Cash Inflows
17.3
24
29.5
32.5
38
41
46.1
49.5
55.4
60

PVIF
0.862
0.743
0.641
0.552
0.476
0.41
0.354
0.305
0.263
0.227

riod, ARR, NPV and IRR for lighting project

PV
14.91
17.83
18.91
17.94
18.09
16.81
16.32
15.1
14.57
13.62
164.1
80
84.1

Calculations of PayBack Period, ARR, NPV and IRR for Switching


Total Investment
Less Woking Capital requirements
Total
Less Cash available
Long term debt requirements

110
25
85
40
45

WACC
Equity
Debt
Total Cost
WACC
Add: 2% risk
WACC

Financing
40
45

Interest Rate
0.20
11%

Cost
8
4.95
12.95

15.24%
2%
17.24%

Pay Back Period

Pay Back Period


Accounting Rate of Return

Years
1
2
3
4
5
6
7
8
9
10
3.72

Cashflows Accumulated CF
19.9
19.9
24.1
44
25.9
69.9
27.3
97.2
29.8
127
32
159
35.1
194.1
38.2
232.3
42
274.3
45.8
320

38%

Net Present Value


Years
1
2
3
4
5
6
7
8
9
10
Present Value
Initial Investment
Net Present Value
Internal Rate of Return

29%

Cashflows
19.9
24.1
25.9
27.3
29.8
32
35.1
38.2
42
45.8

PVIF
0.853
0.725
0.621
0.529
0.4513
0.385
0.3285
0.2802
0.2389
0.2038

PV
16.97
17.54
16.08
14.44
13.45
12.32
11.53
10.7
10.03
9.3
132.36
85
47.36

V and IRR for Switching project

Appendix 3

Calculations of PayBack Period, ARR, NPV and IRR for Both Projects
Total Investment required

205

Total
Less short term investment
Total financing required
Less cash available
Required long term
Debt by English Electronics
Debt from other sources

205
40
165
40
125
80
45

WACC Calculations
Equity
Debt from English Electronics
Debt from other Sources
Total Cost
Add: 2% risk
WACC

Financing Interest Rate


40
20%
80
11%
45
12%
13.45%
2%

Cost
8
8.8
5.4

15.45%

Payback Period

Payback Period
Accounting Rate of Return

Years
1
2
3
4
5
6
7
8
9
10
3.67
42%

Cashflows Accumulated CF
37.2
37.2
48.1
65.4
55.4
120.8
59.8
180.6
67.8
248.4
73
321.4
81.2
402.6
87.7
490.3
97.4
587.7
105.8
693.5

Net Present Value


Years
1
2
3
4
5
6
7
8
9
10
PV
Initial Investment
NPV
Internal Rate of Return

32%

Cashflows
37.2
48.1
55.4
59.8
67.8
73
81.2
87.7
97.4
105.8

PVIF
0.866
0.7502
0.6499
0.5629
0.4876
0.4223
0.3658
0.3168
0.2744
0.2377

PV
32.22
36.08
36
33.66
33.59
30.82
29.7
27.78
26.73
24.96
311.54
165
146.54

d IRR for Both Projects