Expected Life of Proposal (yrs) 10

Initial Fixed Capital Investment $ 50,000,000

Net Working capital Requirement $ 1,000,000
Final Resale Value $ 150,000
Depreciation Rate 10%
Sales at the end of 1st Year $ 10,000,000
Sales Growth rate 20%
$ 120,000 Yr 1-5
Fixed Cash Operating Expenses
$ 130,000 Yr 6-10
Variable Cash Operating Expenses (% of 30% Yr 1-5
Sales) 40% Yr 6-10
Marginal Tax Rate 25%
Required rate of return 10%
Working Capital Requirement (% of Sales) 20%
Year 0 1 2
Sales $ 10,000,000 $ 12,000,000
Fixed Cash Expenses $ 120,000 $ 120,000
Variable Cash Expenses $ 3,000,000 $ 3,600,000
Depreciation $ 5,000,000 $ 5,000,000
Profit after Tax $ 1,410,000 $ 2,460,000
FCF $ 6,410,000 $ 7,460,000
Fixed Capital $ -50,000,000
Working Capital Investment $ -1,000,000 $ -1,000,000 $ -400,000
Cash Flow $ -51,000,000 $ 5,410,000 $ 7,060,000
NPV $ -51,000,000 $ 4,918,182 $ 5,834,711
IRR 17%
 3 4 5 6 7 8 9
$ 14,400,000 $ 17,280,000 $ 20,736,000 $ 24,883,200 $ 29,859,840 $ 35,831,808 $ 42,998,170
$ 120,000 $ 120,000 $ 120,000 $ 130,000 $ 130,000 $ 130,000 $ 130,000
$ 4,320,000 $ 5,184,000 $ 6,220,800 $ 9,953,280 $ 11,943,936 $ 14,332,723 $ 17,199,268
$ 5,000,000 $ 5,000,000 $ 5,000,000 $ 5,000,000 $ 5,000,000 $ 5,000,000 $ 5,000,000
$ 3,720,000 $ 5,232,000 $ 7,046,400 $ 7,349,940 $ 9,589,428 $ 12,276,814 $ 15,501,676
$ 8,720,000 $ 10,232,000 $ 12,046,400 $ 12,349,940 $ 14,589,428 $ 17,276,814 $ 20,501,676

$ -480,000 $ -576,000 $ -691,200 $ -829,440 $ -995,328 $ -1,194,394 $ -1,433,272

$ 8,240,000 $ 9,656,000 $ 11,355,200 $ 11,520,500 $ 13,594,100 $ 16,082,420 $ 19,068,404
$ 6,190,834 $ 6,595,178 $ 7,050,686 $ 6,503,022 $ 6,975,923 $ 7,502,568 $ 8,086,865
 10
$ 51,597,804
$ 130,000
$ 20,639,121
$ 5,000,000
$ 19,371,512
$ 24,371,512
$ 112,500 $ 112,500.00 1
$ 8,599,634
$ 33,083,646
$ 12,755,178 $ 21,413,145