FINANCIAL

Years
Reserch and Development year -1
Initial year investment of 100M made and 20M Working capital 0
1
2
3
4
5

Reduction in Profit due to New Project

Salvage value of Equipment
Working capital return after 5 year

Assumption is taken that proft that is sac

SUBMITTED BY:
VIVEK MALL
PGDM II C
 FINANCIAL MANAGEMENT- ASSIGNMEN
Other expences 30% Raw
material, 20% labour cost,
10% overhead cost +5M
Fixed charges
Cash Flow (in millions) Depreciation Profit before Tax
-10 0 0 Revenu-Dep-Other
-120 0 0 expence
100 25 65 10
150 18.75 95 36.25
200 14.06 125 60.94
150 10.546 95 44.454
100 7.91 65 27.09

NPV
NPV (Net Present Value) = Cash inflow -Expences
-10
20 9.943534705966
20 9.943534705966 Expences = Equipment purchased+ Expence on R&D + Working capital +
Reduction in profit

Cash Inflow = net present value of cash inflow in 5 year after tax before
Dep + Salvage value og Equipment + Working capital

NPV = 2.5470310547465
mption is taken that proft that is sacrificed of 10M for the new project is in the begning
 ASSIGNMENT-5
Net present value of
Profit after Tax Cash inflow after tax PVT cash flow
1.15 -11.5
PBT-tax PAT+Dep 1 -120
6 31 0.86956521739 26.9565217391304
21.75 40.5 0.7561436673 30.6238185255199
36.564 50.624 0.65751623243 33.286101750637
26.6724 37.2184 0.57175324559 21.2797409957798
16.254 24.164 0.4971767353 12.0137786317479

Cash inflow -Expences

pence on R&D + Working capital + Expences = -141.5

n profit

h inflow in 5 year after tax before Cash inflow = 144.047031055

pment + Working capital

(in Millions)