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  • Sales and Cost Analysis of Two Plans

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    Rafay Farooq
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    The document compares two plans (Plan A and Plan B) for a company across various metrics like units sold, revenue, costs, profits, break-even point, return on investment, and debt levels. Plan B generally performs better than Plan A with higher units sold, revenue, profits, and return on investment at various debt levels. The optimal debt level that maximizes profits while maintaining a debt coverage ratio above 1 is shown to be $1,300,000 for Plan B.

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    Port A Cabin - 21010040

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    The document compares two plans (Plan A and Plan B) for a company across various metrics like units sold, revenue, costs, profits, break-even point, return on investment, and debt levels. Plan B generally performs better than Plan A with higher units sold, revenue, profits, and return on investment at various debt levels. The optimal debt level that maximizes profits while maintaining a debt coverage ratio above 1 is shown to be $1,300,000 for Plan B.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    35 views3 pages

    Sales and Cost Analysis of Two Plans

    Uploaded by

    Rafay Farooq
    The document compares two plans (Plan A and Plan B) for a company across various metrics like units sold, revenue, costs, profits, break-even point, return on investment, and debt levels. Plan B generally performs better than Plan A with higher units sold, revenue, profits, and return on investment at various debt levels. The optimal debt level that maximizes profits while maintaining a debt coverage ratio above 1 is shown to be $1,300,000 for Plan B.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 3

    Plan A Plan B

    Units sold 13,025.00 17,025.00 21,025.00 13,025.00


    Sales revenue 11,722,500.00 15,322,500.00 18,922,500.00 11,722,500.00
    Variable Cost (9,117,500.00) (11,917,500.00) (14,717,500.00) (6,382,250.00)
    Fixed Cost (2,567,000.00) (2,567,000.00) (2,567,000.00) (6,035,500.00)
    EBIT 38,000.00 838,000.00 1,638,000.00 (695,250.00)
    Interest Expense 0 0 0 0
    Tax expense (18,240.00) (402,240.00) (786,240.00) 333,720.00
    Net Income 19,760.00 435,760.00 851,760.00 (361,530.00)
    Breakeven Point 12,835 12,835 12,835 14,721
    Initial Investment 4,125,000 4,125,000 4,125,000 4,628,000
    ROI 0.48% 10.56% 20.65% -7.81%

    Sales Value at ROIa =ROIb 17,000

    Debt Interest Rate Ke EBIT Interest Expense

    - 10% 10.50% 944,750 -


    650,000 10.00% 11.20% 944,750 65,000.0
    1,300,000 10.25% 12.25% 944,750 133,250.0
    1,950,000 10.70% 13.75% 944,750 208,650.0
    2,640,000 11.50% 15.95% 944,750 303,600.0
    3,305,000 12.95% 18.90% 944,750 427,997.5
    3,965,000 15.75% 22.50% 944,750 624,487.5
    4,628,000 20.15% 27.00% 944,750 932,542.0
    Plan B 35.00%
    17,025.00 21,025.00
    15,322,500.00 18,922,500.00 30.00%
    (8,342,250.00) (10,302,250.00)
    (6,035,500.00) (6,035,500.00) 25.00%
    944,750.00 2,584,750.00
    0 0 20.00%
    (453,480.00) (1,240,680.00)
    491,270.00 1,344,070.00 15.00%
    14,721 14,721
    4,628,000 4,628,000 10.00%
    10.62% 29.04%
    5.00%

    0.00%

    12,00...

    13,00...

    14,00...

    15,00...

    16,00...
    -5.00%

    -10.00%

    Plan

    Share issued in No of self % shares of


    Firm Value Capital required insured TIE WACC
    Market owners
    shares
    4,678,762.00 4,628,000 462,800 5,076 1.08% 0.00 10.50%
    4,734,554.00 4,628,000 397,800 10,655 2.61% 14.53 10.36%
    4,744,734.69 4,628,000 332,800 11,673 3.39% 7.09 10.31%
    4,733,796.36 4,628,000 267,800 10,580 3.80% 4.53 10.30%
    4,730,269.59 4,628,000 198,800 10,227 4.89% 3.11 10.26%
    4,726,752.91 4,628,000 132,300 9,875 6.95% 2.21 10.21%
    4,705,162.22 4,628,000 66,300 7,716 10.43% 1.51 10.24%
    4,651,512.00 4,628,000 - 2,351 100.00% 1.01 10.48%
    15,00...

    16,00...

    17,00...

    18,00...

    19,00...

    20,00...

    21,00...

    22,00...
    Plan A Plan B

    Payment Debt Coverage Ratio

    0 0
    ($76,348.76) 12.3741
    ($155,311.30) 6.0829
    ($240,084.93) 3.9351
    ($342,420.63) 2.7590
    ($469,066.04) 2.0141
    ($659,891.52) 1.4317
    ($956,885.58) 0.9873

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