PAF Assignment PROJECT APPRAISAL & FINANCE

Years Cash flows DF PV

- -1,000,000 1 -1,000,000
1 300,000 0.89285714285714 267,857
2 250,000 0.79013906447535 197,535
3 250,000 0.69310444252224 173,276
4 350,000 0.60269951523673 210,945
5 400,000 0.51956854761787 207,827
57,440

2
Years Depreciation Tax DF
1 75,000 22,500 0.9090909091 20,455
2 63,750 19,125 0.826446281 15,806
3 54,188 16,256 0.7513148009 12,214
4 46,059 13,818 0.6830134554 9,438
5 39,150 11,745 0.6209213231 7,293
65,204

3 EXPECTED
Qty 1400
Sales 42000
Variable cost 28000
Fixed costs 3000
Depreciation 2000
PBT 9000
Tax 4500
PAT 4500
Cash flows 6500

PVFA (10%, 10 yrs) 6.144

Investment (Year 0) 30000

NPV 9936

Underlying variable Pessimistic Expected Optimistic

Quantity manufactured and sold 800 1400 1800
Price per unit (Rs.) 20 30 50
Variable cost per unit (Rs.) 40 20 15
Cost of capital 12% 10% 8%

Qty 800
Sales 24000
Variable cost 16000
Fixed costs 3000
Depreciation 2000
PBT 3000
Tax 1500
PAT 1500
Cash flows 3500

PVFA (10%, 10 yrs) 6.144

Investment (Year 0) 30000

NPV -8496

PRICE
Qty 1400
Sales 28000
Variable cost 28000
Fixed costs 3000
Depreciation 2000
PBT -5000
Tax 0
PAT -5000
Cash flows -3000

PVFA (10%, 10 yrs) 6.144

Investment (Year 0) 30000

NPV -48432

VC
Qty 1400
Sales 42000
Variable cost 56000
Fixed costs 3000
Depreciation 2000
PBT -19000
Tax 0
PAT -19000
Cash flows -17000

PVFA (10%, 10 yrs) 6.144

Investment (Year 0) 30000

NPV -134448

COC
Qty 1400
Sales 42000
Variable cost 28000
Fixed costs 3000
Depreciation 2000
PBT 9000
Tax 4500
PAT 4500
Cash flows 6500

PVFA (12%, 10 yrs) 5.65

Investment (Year 0) 30000

NPV 6725
RAISAL & FINANCE

NAME : REDDY AKKAMMA BHARATH

SEC : A FINANCE
USN : 20MBAJ0062
Qty 1800
Sales 54000
Variable cost 36000
Fixed costs 3000
Depreciation 2000
PBT 13000
Tax 6500
PAT 6500
Cash flows 8500

PVFA (10%, 10 yrs) 6.144

Investment (Year 0) 30000

NPV 22224

Qty 1400
Sales 70000
Variable cost 28000
Fixed costs 3000
Depreciation 2000
PBT 37000
Tax 18500
PAT 18500
Cash flows 20500

PVFA (10%, 10 yrs) 6.144

Investment (Year 0) 30000

NPV 95952

Qty 1400
Sales 42000
Variable cost 21000
Fixed costs 3000
Depreciation 2000
PBT 16000
Tax 8000
PAT 8000
Cash flows 10000

PVFA (10%, 10 yrs) 6.144

Investment (Year 0) 30000

NPV 31440

Qty 1400
Sales 42000
Variable cost 28000
Fixed costs 3000
Depreciation 2000
PBT 9000
Tax 4500
PAT 4500
Cash flows 6500

PVFA (8%, 10 yrs) 6.71

Investment (Year 0) 30000

NPV 13615