Value in CAD 2021 2022 2023

Initial investment -840,000

Sales revenue 600,000 1,080,000

(-) Initial cost (Setup

of contract) 284,900 434,829
(-) Operating Cost 244,200 248,474
EBITDA 70,900 396,698
(-) Depreciation straight-line
over 3-year 280,000 280,000
EBIT (209,100) 116,698
(-) Tax (35%) (73,185) 40,844
EAT (135,915) 75,854
(+) Depreciation straight-line
over 3-year 280,000 280,000
Net operating cashflow -840,000 144,085 355,854
 2024 2025 2026

1,050,000 750,000 570,000

294,959 150,060 152,686

379,233 385,869 261,748
375,809 214,070 155,566

280,000
95,809 214,070 155,566
33,533 74,925 54,448
62,276 139,146 101,118

280,000
342,276 139,146 101,118
 Initial setup fees
Value in CAD Quantity sold /year per contract

2022 20 21,000
2023 30 21,000

2024 20 21,000
2025 10 21,000
2026 10 21,000
 Generated money
Generated amount from annual
from initial setup fees Annual licensing fees
= Initial setup fees licensing =Ongoing contracts
per contract x fees per Yearly ongoing x Annual licensing
Quantity sold/year contract contracts fees per contract

420,000 9,000 20 180,000

630,000 9,000 50 450,000

420,000 9,000 70 630,000

210,000 9,000 60 540,000
210,000 9,000 40 360,000
Sales revenue =Generated
money from annual Yearly cost per Yearly operating
licensing fees +Generated unit = CAD14000 cost = Operating
amount x (1 + inflation cost x (1+inflation
from initial setup fees rate)^t rate)^t

600,000 14,245 244,200

1,080,000 14,494 248,474

1,050,000 14,748 379,233

750,000 15,006 385,869
570,000 15,269 261,748
WACC 9.65%

Net operating CAD/USD Net operating cashflow

Year cashflow exchange (USD) = NOCF (CAD) x
(CAD) rate forecast CAD/USD quote
2021
(spot rate) (840,000) 0.860 (722,400)
2022 144,085 0.825 118,870
2023 355,854 0.805 286,462
2024 342,276 0.790 270,398
2025 139,146 0.780 108,534
2026 101,118 0.775 78,366
NPV (CAD) 7,058 NPV (USD) (46,105) < 0
IRR (CAD) 10% IRR (USD) 7% < WACC
Year
(1) US inflation: home country
(2) Canada inflation: foreign country
(3) Spot rate CAD/USD (2021)

(4) % depreciation of CAD

eF =( [(1+i)/(1+i*)]^n)-1

(5) Expected CAD/USD exchange

rate
(forward rate)
[(3) x (1 + (4)]
 2021 2022 2023 2024 2025 2026
1.50%
1.75%
0.86

-0.245% -0.490% -0.735% -0.980% -1.222%

0.857 0.855 0.853 0.851 0.849

The given rate
Year 2021 2022
(1) US inflation: home country 1.50%
(2) Canada inflation: foreign country 1.75%
(3) Spot rate CAD/USD (2021) 0.86

% depreciation of CAD
eF = (F - S) /S -4.07%

Expected exchange rate

(forward rate) (CAD/USD)
F = S x (1 + eF) 0.825

WACC 9.65%

Net operating
Year cashflow
(CAD)

2021
(spot rate) (840,000)
2022 144,085
2023 355,854
2024 342,276
2025 139,146
2026 101,118
NPV (CAD) 7,058.27
IRR (CAD) 10%
 2023 2024 2025 2026

-6.395% -8.14% -9.302% -9.883%

0.805 0.79 0.78 0.775

New forecast New net operating

exchange rate cashflow
(CAD/USD) (USD)

0.86 (722,400)
0.857 123,481
0.855 304,255
0.853 291,961
0.851 118,413
0.849 85,849
NPV (USD) 810.58 > 0
IRR (USD) 10% > WACC