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  • Windowlux - Case Solution

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    anisa
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    This document presents a financial analysis of a proposed investment by a company called Windowlux. It shows the projected investments, costs, revenues, and cash flows over a 6 year period. The net present value of the projected cash flows is negative €839,000, which is lower than the firm's cost of capital of 7.2%, indicating the project would not be profitable.

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    Windowlux Solution

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    This document presents a financial analysis of a proposed investment by a company called Windowlux. It shows the projected investments, costs, revenues, and cash flows over a 6 year period. The net present value of the projected cash flows is negative €839,000, which is lower than the firm's cost of capital of 7.2%, indicating the project would not be profitable.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    32 views2 pages

    Windowlux - Case Solution

    Uploaded by

    anisa
    This document presents a financial analysis of a proposed investment by a company called Windowlux. It shows the projected investments, costs, revenues, and cash flows over a 6 year period. The net present value of the projected cash flows is negative €839,000, which is lower than the firm's cost of capital of 7.2%, indicating the project would not be profitable.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    Windowlux - case solution

    Figures in € 000 0 1 2 3 4 5 6
    INVESTMENT PLAN 20xx 20xx+1 20xx+2 20xx+3 20xx+4 20xx+5 20xx+6
    Main plant -12,000.00
    Secondary plant -1,800.00
    Marketing campaign -1,200.00
    Disinvestment 400.00 300.00
    Total investments/disinvestments -12,000.00 -1,200.00 -1,400.00 0.00 0.00 0.00 300.00

    DEPRECIATION PLAN 20xx 20xx+1 20xx+2 20xx+3 20xx+4 20xx+5 20xx+6


    Depreciation main plant 2,400.00 2,400.00 2,400.00 2,400.00 2,400.00
    Depreciation second plant 600.00 600.00 600.00
    Depreciation of the marketing campaign 400.00 400.00 400.00
    Depreciation of the dismissed plant -400.00
    Total Ammortizations 2,400.00 2,800.00 3,000.00 3,400.00 3,000.00

    WORKFORCE 20xx 20xx+1 20xx+2 20xx+3 20xx+4 20xx+5 20xx+6


    Number of employees without project 450.00 450.00 450.00 450.00 450.00
    Number of employees with the project 450.00 400.00 380.00 380.00 380.00
    Difference in units 0.00 -50.00 -70.00 -70.00 -70.00
    Expected cost for 1 employees ('000) 32.00 32.00 32.00 32.00 32.00
    Workforce differental costs 0.00 -1,600.00 -2,240.00 -2,240.00 -2,240.00

    DIFFERENTIAL SALES 20xx 20xx+1 20xx+2 20xx+3 20xx+4 20xx+5 20xx+6


    Incremental sales 4,300.00 5,000.00 5,800.00 6,500.00 7,300.00
    DIFFERENTIAL COSTS 20xx 20xx+1 20xx+2 20xx+3 20xx+4 20xx+5 20xx+6
    Differential costs for raw material -2,000.00 -2,500.00 -3,000.00 -3,200.00 -3,700.00
    Differential SG&A -300.00 -400.00 -480.00 -550.00 -630.00
    Differential workforce costs 0.00 1,600.00 2,240.00 2,240.00 2,240.00
    Differential marketing costs -200.00 -200.00 -200.00 -200.00
    Total differential costs -2,300.00 -1,500.00 -1,440.00 -1,710.00 -2,290.00

    WORKING CAPITAL 20xx 20xx+1 20xx+2 20xx+3 20xx+4 20xx+5 20xx+6


    Incremental receivable 120 dd 1,433.33 1,666.67 1,933.33 2,166.67 2,433.33
    Incremental payables 90 dd 500.00 625.00 750.00 800.00 925.00
    Incremental inventories 6 mm 1,000.00 1,250.00 1,500.00 1,600.00 1,850.00
    Yearly changes in receivable 1,433.33 233.33 266.67 233.33 266.67 -2,433.33
    Yearly changes in payables 500.00 125.00 125.00 50.00 125.00 -925.00
    Yearly changes in inventories 1,000.00 250.00 250.00 100.00 250.00 -1,850.00
    Changes in working capital 1,933.33 358.33 391.67 283.33 391.67 -3,358.33

    PROJECT'S CASH FLOWS 20xx 20xx+1 20xx+2 20xx+3 20xx+4 20xx+5 20xx+6
    Differential sales 4,300.00 5,000.00 5,800.00 6,500.00 7,300.00
    Differential costs -2,300.00 -1,500.00 -1,440.00 -1,710.00 -2,290.00
    EBITDA 2,000.00 3,500.00 4,360.00 4,790.00 5,010.00
    - Differential depreciations -2,400.00 -2,800.00 -3,000.00 -3,400.00 -3,000.00
    EBIT -400.00 700.00 1,360.00 1,390.00 2,010.00
    - Taxes (40%) tax credit 160.00 -280.00 -544.00 -556.00 -804.00 -120.00 addtional income additional tax
    NOPAT -240.00 420.00 816.00 834.00 1,206.00 -120.00
    + Differential depreciations 2,400.00 2,800.00 3,000.00 3,400.00 3,000.00
    2,160.00 3,220.00 3,816.00 4,234.00 4,206.00 -120.00
    - Increase/(+) decrease in working capital -1,933.33 -358.33 -391.67 -283.33 -391.67 3,358.33
    - Investments/(+) Disinvestments -12,000.00 -1,200.00 -1,400.00 0.00 0.00 0.00 300.00
    Net cash flows -12,000.00 -973.33 1,461.67 3,424.33 3,950.67 3,814.33 3,538.33

    20xx 20xx+1 20xx+2 20xx+3 20xx+4 20xx+5 20xx+6


    Year 0.00 1.00 2.00 3.00 4.00 5.00 6.00
    Expected cash flows -12,000.00 -973.33 1,461.67 3,424.33 3,950.67 3,814.33 3,538.33
    Discount factors = 1/(1+Wacc)^t 1.00 0.93 0.87 0.81 0.76 0.71 0.66
    PV of cash flows -12,000.00 -907.96 1,271.92 2,779.66 2,991.52 2,694.29 2,331.47
    Cumulate of PV of cash flows -12,000.00 -12,907.96 -11,636.04 -8,856.38 -5,864.87 -3,170.58 -839.10

    Firm cost of capital 7.200%

    NPV - 839
    IRR 5.461% lower tthan 7.2% because NPV is negaive so it's low than the cost of capital
    addtional income additional tax

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