Degnis Co

year 0 1 2 3 4
sales 12525 15030 22545 22545 Volume 250
V.cost -7912.5 -9495 -14242.5 -14242.5 sales
fixed cost -4000 -5000 -5500 -5500 Year 1
O.cashflows 612.5 535 2803 2803 s/price 50.1
tax @ 28% -171.5 -149.8 -784.7 -784.7
tax savings 112 112 112 112 V.cost
investment -4000 year 1
S.value 0 V.cost 31.65
net cashfl -4000 553 497 2130 2130
D.f @ 11% 1 0.901 0.812 0.731 0.659 tax sav
P.Value -4000 498 404 1557 1404 400 112

NPV -138

Pinks Co
Nominal term
year 0 1 2 3 4
sales volume'000 300 410 525 220
S.price
sales 39375 58763.25 85085.44 32089.37 year
V.cost -22046 -31183 -41327 -17924 S.price
fixed cost -3180 -3483 -3811 -3787 inflated s.p
operating cashflows 14150 24097 39947 10378
tax 26% -3679 -6265 -10386 -2698 V.cost
tax savings 1300 975 731.25 2193.75 year
initial inv -20000 V.cost
residual value 0 inflated v.
net cashfl -20000 11771 18807 30292 9873
d.factor 1 1 0.893 0.797 0.712 0.636 tax savings
present va -20000 10511 14989 21568 6279 year
1
NPV 33347 2
3
4

Real term
year 0 1 2 3 4
sales 37500 53300 73500 26400
v.cost -21300 -29110 -37275 -15620
f.cost -3000 -3100 -3200 -3000
operating c.f 13200 21090 33025 7780
tax 26% -3432 -5483.4 -8586.5 -2022.8
tax savings 1300 975 731.25 2193.75
investment -20000
s.value 0
net cashfl -20000 11068 16581.6 25169.75 7950.95
d.f @ 8% 1 0.926 0.857 0.794 0.735
present va -20000 10248.97 14210.43 19984.78 5843.948

NPV 30288.13
 WORKINGS
300 450 450

2 3 4
50.1 50.1 50.1

2 3 4
31.65 31.65 31.65

WORKINGS

1 2 3 4
125 130 140 120
131.3 143.3 162.1 145.9

1 2 3 4
71 71 71 71
73.485 76.05698 78.71897 81.47413

tax savings
Written docapital all tax savings
20000 5000 1300
15000 3750 975
11250 2812.5 731.25
8437.5 8437.5 2193.75