Professional Documents
Culture Documents
(In Crores)
Year Income (Profit Depreciation Cash Cumulative
After Tax) Inflows Cash In Flows
1 936.6 342.36 1278.96 1278.96
2 1353.25 342.36 1735.24 3014.2
3 1428.84 342.36 1810.83 4825.03
4 1409.44 342.36 1791.43 6616.46
5 1429.93 342.36 1811.92 8428.38
6 1484.12 342.36 1866.11 10294.49
7 1551.28 342.36 1933.27 12227.76
8 1610.83 342.36 1992.82 14220.58
9 1660.57 342.36 2042.56 16263.14
10 1717.06 342.36 2099.05 18362.19
11 1779.39 342.36 2161.38 20523.57
12 1846.9 342.36 2222.95 22746.52
13 1919.1 342.36 2301.09 25047.61
14 1995.69 342.36 2377.09 27424.7
15 2076.43 342.36 2458.42 29883.12
264
264*12/1866.11=1.6976
Interpretation:
20 days to 6 years will be right, so that it will give more assistance To the
calculation.
GRAPH NO-1:
crores
40000
30000
20000 crores
10000
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year Income
1 936.6
2 1353.25
3 1428.84
4 1409.44
5 1429.93
6 1484.12
7 1551.28
8 1610.83
9 1660.57
10 1717.06
11 1779.39
12 1846.9
13 1919.1
14 1995.69
15 2076.43
Total 24199.43
ARR= -----------------------------*100
Average investment
Net profit after tax 24199.43
Avg net Profit after tax= --------------------------- = ------------- =1613.29
No of years 15
Investment 8692
Average investment= ---------------- + ad.WC = --------- +702
=5048
2
1613.29
ARR= ------------- *100 =31.95%
5048
Interpretation:
crores
2500
2000
1500
1000
500
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
TABLE-3:
Interpretation:
3000
2500
2000
Year
income
1500
Dcf (19%)
Npv
1000
500
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
In ICML, the rate at which the sum totals of cash inflows after
discounting equals to the discounted cash outflows.
TABLE-4:
Discount rate taken as 18%
(In crores)
DCf
YEAR INCOM NPV
(18%)
E
1 1278.96 0.847 1083.279
2 1735.24 0.718 1245.902
3 1810.83 0.609 1102.795
4 1791.43 0.516 887.226
5 1811.92 0.437 791.809
6 1866.11 0.37 690.461
7 1933.27 0.314 607.047
8 1992.82 0.266 530.09
9 2042.56 0.225 459.576
10 2099.05 0.191 400.919
11 2161.38 0.162 350.144
12 2222.95 0.137 304.544
13 2301.09 0.116 266.926
14 2377.09 0.099 235.332
15 2458.42 0.084 206.507
Total 9162.557
GRAPH NO-4:
3000
2500
2000
YEAR
1500
INCOME
DCf
1000
NPV
500
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
-500
TABLE-5:
Discount rate taken as 22%
V.S.M COLLEGE 60 ANDHRA UNIVERSITY
I.C.M LIMITED CAPITAL BUDGETING
(in crores)
YEAR INCOME DCF NPV
(22%)
1 1278.96 0.82 1048.74
2 1735.24 0.672 1166.08
3 1810.83 0.551 997.76
4 1791.43 0.451 807.93
5 1811.92 0.37 670.41
6 1866.11 0.303 565.43
7 1933.27 0.249 481.38
8 1992.82 0.204 406.53
9 2042.56 0.167 341.10
10 2099.05 0.137 287.56
11 2161.38 0.112 242.07
12 2222.95 0.092 204.51
13 2301.09 0.075 172.58
14 2377.09 0.062 147.37
15 2458.42 0.051 125.37
Total: 7664.82
A
I R R = L + (H – L)
(A –
B)
RL Rl value RH RH value
18% - 9162 22% - 7664 - 8692
Interpretation:
GRAPH NO-5:
3000
2500
2000 YEAR
INCOME
1500
DCF (22%)
1000 NPV
500
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
TABLE-6:
8773.954
= -------------- =1.0094
8692
Interpretation:
3000
2500
2000
YEAR
1500
INCOME
1000
500
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
1ST Condition:
When 70% of the project expenses is taken through loans (long term at
5.5%) & rest. 30% as equity.
Particular Amount
EBIT 2209 Cr
Less : Interest
8692 X 70% - (6084. 4 Cr X 5.5% as int) 334.642 Cr
EBT 1874.358 Cr
Less : Tax at 35% as on
1874.358 x 35% 656.025 Cr
EAT 1218.333 Cr
Less: Pref. Share at 7%
(No – issue of pref. Share) ____
E To E 1218.333 Cr
For EPS – Earning per share 46.72
Calculation of EPS:
______________________
No of Equity Share
12183330000
26076000
= 467.22
2nd Condition:
EPS calculation:
60844000000
In Rs. = = 60844000 No of Equity
Face value 1000 /Share
So,
E to E 13426280000
EPS =
No of Equity 60844000
= 220.66
3rd Condition:
Particular Amount
EBIT 2209.00 Cr
Less : Interest on debts
8692 X 60% - 5215.2. X 5.5% = 286.836 286.836 Cr
Cr
EBT 1922.164 Cr
Less : Tax at 35% as on
1922 .164 x 35% = 672.757 Cr 672.757
EAT 1249.407 Cr
Less: Pref: Share at 7%
(No – issue of pref. Share) -
E To E 1249.407 Cr
For EPS – Earning per share 35.93 Cr
EPS Calculations:
Project cost = 8692 Cr
40%as equity = 3476.80 Cr
In Rs. = 34768000000
Phase value = 1000/share
No of equity 34768000000
Share = 34768000
1000
For EPS
E to E = 1249.407 Cr
EPS = 34768000
=359.35