Workings

# of units 1
10,000 X 5%
10500
Sale Price 16.05
Material 3.9375
lb 2.65
Fixed Overheads 38250

1
225000 X 33.33 74992.5
225000 X 44.45%
225000 X 14.81%
225000 X 7.41%

sale price 16.05

less variable cost
Material 3.9375
Labour 2.65
sale-material-labor
Contribution Margin 9.4625
# no. f members per year 10500

Total CM 99356.25

less incremental Fixed Cost 38250

Profit before tax & deprecion 61106.25

less deprecition 74992.5

Profit before tax -13886.25

Add Deprecition 74992.5

Operating Cash Inflows 61106.25

1/(1+r)^n
PV factor @ 10% 0.909090909090909
PV of cash inflows 55551.1363636364

Total PV of cash inflows 330595.162730656

Initial cash outflows 225000
Net PV 105595.162730656
Decision Accept
 2 3 4 5

11025 11576 12155 12763

17.1735 18.375645 19.6619402 21.038276
4.134375 4.34109375 4.55814844 4.78605586
2.809 2.97754 3.1561924 3.34556394
39015 39795.3 40591.206 41403.0301

2 3 4
100012.5 33322.5 16673

17.1735 18.375645 19.6619402 21.038276

4.134375 4.34109375 4.55814844 4.78605586

2.809 2.97754 3.1561924 3.34556394

10.230125 11.0570113 11.9475993 12.9066562

 11025 11576 12155 12763

112787.1281 127995.962 145223.07 164727.653

39015 39795.3 40591.206 41403.0301

73772.12813 88200.6622 104631.864 123324.622

100012.5 33322.5 16673 0

-26240.37188 54878.1622 87958.8636 123324.622

100012.5 33322.5 16673 0

73772.12813 88200.6622 104631.864 123324.622

0.826446281 0.75 0.683 0.62

60968.70093 66150.4967 71463.5629 76461.2659
 15000*100
increase 10% of revune each year
1 2
Annual Saving 1500000 2150000
expenses 1000000 1500000

Profit before dep 500000 650000

Deprication 240000 384000

Earnings before interest 260000 266000

tax 18% 46800 47880

After tax proceeds 213200 218120

Add: Deprication 240000 384000

Operating cash inflows 453200 602120

PV factor @ 10% 0.909090909 0.826446281

PV of cash inflows 412000 497619.8347

Total PV of cash inflows 2644753.445

intail cash outflow 1500000
Net PV 1144753.445

Decision Accept
e each year
3 4 5
2715000 3271500 3827150
2050000 2205000 2520500

665000 1066500 1306650

228000 144000 144000

437000 922500 1162650

78660 166050 209277

358340 756450 953373

228000 144000 144000

586340 900450 1097373

0.75 0.683 0.62

439755 615007.35 680371.26

 year Reveune
1 1500000
6 2 2150000
0 3 2715000
0 4 3271500
5 3827150

60000 Asset price 1,500,000

Deprication 1 1200000
-60000 2 1200000
0 3 1200000
4 1200000
-60000 5 1200000
60000 6 1200000

0
 10% Expenses 10%
150000 1000000 100000
215000 1500000 150000
271500 2050000 205000
327150 2205000 220500
382715 2520500 252050

20% 240000
32% 384000
19 228000
12 144000
12 144000
5 60000

1200000
working capital
npv
pay back period
adjusting payback period
IRR
IRR rules
interpolation method of calculationg
Risk
profit index formula
 increase 10% of savings each year
1 2
Annual Saving 1500000 2150000
expenses 1000000 1500000

Profit before dep 500000 650000

Deprication 240000 384000

Earnings before interest and taxes 260000 266000

tax 18% 46800 47880

After tax proceeds 213200 218120

Add: Deprication 240000 384000

Operating cash inflows 453200 602120

PV factor @ 10% 0.90909090909 0.82644628099

PV of cash inflows 412000 497620

Add: working capital
Total PV of cash inflows 2944753.44471
intail cash outflow 1500000

Net PV 1444753.44471

Decision Accept
gs each year 1
3 4 5 6 2
2715000 3271500 3827150 0 3
2050000 2205000 2520500 0 4
5
665000 1066500 1306650
228000 144000 144000 60000 Asset price
Deprication 1
437000 922500 1162650 -60000 2
78660 166050 209277 0 3
4
358340 756450 953373 -60000 5
228000 144000 144000 60000 6

586340 900450 1097373 0

0.75 0.683 0.62 Years

439755 615007.35 680371.26 1

300000 2
3
4
5
 1500000 150000 1000000 100000
2150000 215000 1500000 150000
2715000 271500 2050000 205000
3271500 327150 2205000 220500
3827150 382715 2520500 252050

1,500,000
1200000 20% 240000
1200000 32% 384000
1200000 19 228000
1200000 12 144000
1200000 12 144000
1200000 5 60000

Pay Back period 1200000

cash flows Pv 10%

412000 0.90909090909
497619.83471074 0.82644628099
439755 0.75
615007.35 0.683
980371.26 0.62

Pay Back period 3.2

Discounted Payback period 3.9

IRR

Years cash flows Pv 32% Total cash flows

1 453200 0.757575757576 343333.3333333 453200
2 602120 0.573921028466 345569.3296602 602120
3 586340 0.434788657929 254933.9816902 586340
4 900450 0.329385346916 296595.0356305 900450
5 1097373 0.249534353724 273832.2623495 1097373
Total 1514263.942664

NPV=-intail cash out flow+Sum of pv cash inflws

1500000 1514263.942664
interpolation methods of calculting IRR

(high pv - required value/high pv- lower pv)*rate Difference+lower rate

32458.5747886335
14263/32426
0.43986307284278
0.14515481403812
14
IRR 14%
 New Asset
cost of asset 1250000
Add:installation cost 50000
1300000
Minus: After tax procceds from sales of old asset

Procced from sale of old asset 0

Add Or Sub: Tax on sale of old asset 0

Change in net working capital 200000

Intial investment 1500000

Book value= installed cost of asset- accumalated dep

1500000-1500000
Book Value 0

0.21
1.21

PV 33% Total
0.75187969924812 340751.879699248
0.5653230821414 340392.334219006
0.4250549489785 249226.718784071
0.3195901872019 287774.984065952
0.240293373836 263691.460526551
1481837.37729483

1500000 1481837.37729483