Base OCF Calculation

Project Life 6 years Sales

Annual Unit slaes 40000 Expenses
Unit Price 5 Operating Profit/Ne
Variable cost per unit 1.5 Depreciation
Investment in fixed capital 300000 EBIT(Interest not c
Investment in working Capital 50000 Tax
Depreciation 50000 PAT
Salvage Value at the end of six years 60000
Marginal Tax Rate 40% OCF
RRR 12% Base Case NPV

Case 1
OCF Calculation for lower Unit Pric
Sales
Expenses
Operating Profit
Depreciation
EBIT
Tax
PAT

OCF
NPV

Case 5
 OCF Calculation lower Variable Cos
Sales
Expenses
Operating Profit
Depreciation
EBIT
Tax
PAT

OCF
NPV

Case 9
OCF Calculation lower tax rate
Sales
Expenses
Operating Profit
Depreciation
EBIT
Tax
PAT

OCF
NPV
 Base OCF Calculation -10%
200000 Unit Price 5 4.5
60000 Annual Unit slaes 40000 36000
140000 Variable cost per unit 1.5 1.35
50000 Expected Salvage Value 60000 54000
90000 Marginal Tax Rate 40% 0.36
36000 RRR 12% 0.108
54000

104000
121156.638067571 Case 7 Salvage Value 82400
Case 8 Salvage Value 89600
Case 9 Lower Tax 88400
Case 10 Higer Tax 83600
Case 11 lower RRR

Case 2
F Calculation for lower Unit Price OCF Calculation for higher Unit Price
180000 Sales 220000
60000 Expenses 60000
120000 Operating Profit 160000
50000 Depreciation 50000
70000 EBIT 110000
28000 Tax 44000
42000 PAT 66000

92000 OCF 116000

71819.7501853035 NPV 170493.52595

Case 6
 Calculation lower Variable Cost OCF Calculation higher Variable Cost
200000 Sales 200000
54000 Expenses 66000
146000 Operating Profit 134000
50000 Depreciation 50000
96000 EBIT 84000
38400 Tax 33600
57600 PAT 50400

107600 OCF 100400

135957.704432252 NPV 106355.5717

Case 10
OCF Calculation lower tax rate OCF Calculation higher tax rate
200000 Sales 200000
60000 Expenses 60000
140000 Operating Profit 140000
50000 Depreciation 50000
90000 EBIT 90000
32400 Tax 39600
57600 PAT 50400

107600 OCF 100400

137173.619123077 NPV 105139.65701
 10%
5.5 Year 0 Year 1 Year 2
44000 -350000 104000 104000
1.65
66000 Case 1 -350000 92000 92000
0.44
0.132 Case 2 -350000 116000 116000

Case 3 -350000 95600 95600

Case 4 -350000 112400 112400

Case 5 -350000 107600 107600

Case 6 -350000 100400 100400

Case 7 -350000 104000 104000

Case 8 -350000 104000 104000

Case 9 -350000 107600 107600

Case 10 -350000 100400 100400

Case 3 Case 4
OCF Calculation lower annual sales OCF Calculation higher annual sales
Sales 180000 Sales 220000
Expenses 54000 Expenses 66000
Operating Profit 126000 Operating Profit 154000
Depreciation 50000 Depreciation 50000
EBIT 76000 EBIT 104000
Tax 30400 Tax 41600
PAT 45600 PAT 62400

OCF 95600 OCF 112400

NPV 86620.8165499838 NPV 155692.459585159

Case 7 Case 8
 OCF Calculation lower salvage value OCF Calculation higher salvage value
Sales 200000 Sales 200000
Expenses 60000 Expenses 60000
Operating Profit 140000 Operating Profit 140000
Depreciation 50000 Depreciation 50000
EBIT 90000 EBIT 90000
Tax 36000 Tax 36000
PAT 54000 PAT 54000

OCF 104000 OCF 104000

NPV 119332.766031333 NPV 122980.51010381

Case 11 Case 12
OCF Calculation lower RRR OCF Calculation higher RRR
Sales 200000 Sales 200000
Expenses 60000 Expenses 60000
Operating Profit 140000 Operating Profit 140000
Depreciation 50000 Depreciation 50000
EBIT 90000 EBIT 90000
Tax 36000 Tax 36000
PAT 54000 PAT 54000

OCF 104000 OCF 104000

NPV 139001.872821404 NPV 104311.42133395
Year 3 Year 4 Year 5 Year 6
104000 104000 104000 104000
86000
92000 92000 92000 92000
86000
116000 116000 116000 116000
86000
95600 95600 95600 95600
86000
112400 112400 112400 112400
86000
107600 107600 107600 107600
86000
100400 100400 100400 100400
86000
104000 104000 104000 104000
82400
104000 104000 104000 104000
89600
107600 107600 107600 107600
88400
100400 100400 100400 100400
83600

Range estimates

Unit Price 98673.776

Annual Unit slaes 69071.643
Variable cost per unit 29602.133
Expected Salvage Val 3647.7441
Marginal Tax Rate 32033.962
RRR 34690.451