BETHESDA MINING COMPANY

in thousand

1

Quantity
Produced
(ton)
650

20400

2000

22400

2

725

20400

5000

25400

3

810

20400

8400

28800

4

740

20400

5600

26000

Year

Sales revenue ($)
34

Total Sales
Revenue

40

MACRS Schedule
Year

7 Years

1

0.14

2

0.25

3

0.18

4

0.13

5

0.89

6

0.89

7

0.89

In thousand USD
New Mining Equipment

30,000
0

1

2

3

4

5

6

Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Investments:
1

New Mining Equipment

2

Accumulated depreciation
new mining
equipment after
depreciation (end of
Opportunity Cost

3
4

(30,000)

14,716.8
4,290
25,710

- Land

11,640
18,360

16,890
13,110

9,360

(5,000)

5

Net Working capital (end
5%
of year)

6

Change in net working capital

7

Total Cash Flow of Investment

-

(35,000)

20,640

5,000
1,120

1,270

1,440

1,300

(1,120)

(150)

(170)

140

(1,120)

(150)

(170)

5,140

-

-

Income:
8

Sales revenue

9

Operating Costs:
- Fixed cost
- Variable Cost

13

22,400

25,400

28,800

26,000

(2,500)
(8,450)

(2,500)

(2,500)

(2,500)

(9,425)

(10,530)

(9,620)

-Land reclaiming

(4,000)

-Charitable expense
10

Depreciation

11

Income before taxes

12

Tax at 38%

13

Net Income

(6,000)

38%

(4,290)

(7,350)

(5,250)

(3,750)

7,160

6,125

10,520

6,130

-

2,721

2,328

3,998

2,329

-

4,439

3,798

6,522

3,801

-

(6,000)
(6,000)

* The taxable amount $8.640 = (60% x 30.000) - $9.360. The aftertax salvage value is $18.000 - (38%($18.000-$9.360)) = $ 14.716,8
1

Net Present Value
Cash Inflow

Year 0

1

2

3

4

5

Total Inflow

-

8,729

11,148

11,772

22,267

-

6
(6,000)

Cash Outflow
Total Outflow

35,000

Net Cash Flow

(35,000)

DCF

2

12%

-

-

22,267

-

1.0000

0.8929

0.7972

0.7118

7,794

8,887

8,379

NPV

32,296

IRR

13.51%
Year 0

Payback Period

1
(26,271)

2
(15,123)

3
(3,351)

0.6355
14,151

0.5674
-

(6,000)
0.5066
(3,040)

4

5

6

18,917

18,917

12,917

3.1505

Profitability Index
PV Cash Inflow

Year 0

1

2

3

4

5

-

7,794

8,887

8,379

14,151

-

35,000

-

-

-

-

-

PV Cash Outflow
Profitability Index

1.0335

Average Accounting Return
Average net income=

2,093

Average investment=

35,000

AAR=
6

11,772

-35,000

Accumulated NCF (35,000)

5

11,148

Present Value

3

4

8,729

Modified IRR

6%
5.99%

6
(3,040)
-

77 19.00 8.560 67.160 14.795.440)) = $ 45.000 16.840 73.480 36.00 59.560 82.542 13 Net Income 4.46% Variable Cost per unit 18 18.533 27.880 4.51 ### 70.705.05 66.89 ### MACRS Schedule Year 7 Years 0.518 .14 1 0.13 4 0.GOODWEEK TIRES.4 39.825 112.76% Modified IRR 7.313 40% * The taxable amount is $ 13.000) 3 Adjusted basis of new equipment after depreciation (end of year) 4 Opportunity Cost 5 Net Working capital (end of year) 6 7 45.Replacement Market Year 1 2 3 4 2% 3.60 916 ### 41.331 24.000) (1.829 1 2 3 4 3.395 22.85 ### 79.799 35.520) (72.160 36.25 2 0.000 25.000 14.53 ### 8.9% -131.000 .13 24.804) (3.7444 0.218) 43.651 27.000) (1.920.500 AAR= 17.829 131.439) IRR 10.000 .30 64.56 20.813 26.503 20.00 85.804 44.46 21.239.565.91 934 ### 43.533 27.360.281 40.440 37.18 40.8669 Average Accounting Return Average net income= 11.$37.OEM Market .000 880 1.874 16.910.12 ### 74.284.560 102.045.89 6 0.000 12.070) (1.933 9.529 119.889 Cash Outflow Total Outflow 131.000) (109.843.399 14.070) (1.68 19.503 80. The aftertax salvage value $51.360 105.39 in thousand Variable Cost Total OEM Replacement Variable Cost 15.160 46.( 40%x($51.000 .Marketing&General Administration Cost 25.000 NPV (17.804 15.503 80.000 11 Income before taxes 7.25% 11% 8% Industry Quantity Produced Quantity Produced (unit) Price ($/unit) Sales revenue ($) Total Sales (unit) Replacement OEM OEM Replacement OEM Replacement OEM Replacement Revenue 8.395 22.266.14 38.006) (1.706 43.804) (3.$37.437.440 - - - - - 11.25 43.000 15.400 21.18 3 0.000 Net Cash Flow DCF 2 15.5542 18.000 - - - - 0.440 52.560 (=$51.490 14.171 33.717.0000 Present Value 3 4 ### Year 0 1 2 3 4 - 18.142.856.450.25% Year 0 Payback Period Accumulated NCF PV Cash Outflow Profitability Index 6 - - - - 21.480 36.320 7.280 898 1.284 10 Depreciation 17.60 17.8628 0.949 Change in net working capital (11.879 17.6423 0.657 .38 .323 14.50 22.89 5 0. Growth of Sales Inflation Rate Market share .000 In thousand USD 0 1 2 3 4 Year 0 Year 1 Year 2 Year 3 Year 4 Investments: 1 New Equipment 2 Accumulated depreciation (120.576 17.INC.855 12 Tax at 40% 2.Variable Cost 36.200 12.576 1 Net Present Value Cash Inflow Year 0 1 2 3 4 Total Inflow - 21.006) (1.280.889 0.17 ### 8.440).00 ### 51.069) Total Cash Flow of Investment (131.804 44.671 Profitability Index PV Cash Inflow 5 1.89 7 New Equipment 120.634 Average investment= 65.000 38.5399 (131.160 29.120 38.721) (37.799 35.069) 15% Income: 8 Sales revenue 9 Operating Costs: 85.62 61.840 20.669 13.

750.00 8.425.640.710.439.360.80 4.80 2.30 64.00 26.00 1.00 - 1.716.05 1.00) 140.Land 5 Net Working capital (end of year) 14.350.800.00 6.38 .20 3.00 (150.00 11.00) (170.00 2.12 43.856.120.270.00 10.300.60 3.85 30.00 (5.00 10.00 3.720.00 10 Depreciation 4.640.00 ### 9.60 .500.110.00 1.00 9.530.40 4.00 7.00 2.500.05 66.Fixed cost 2.80 Income: 8 Sales revenue 22.290.00 11 Income before taxes 7.40 6.00 13.00 28.00 25.450.522.520.797.125.00 5.00 6 Change in net working capital 7 Total Cash Flow of Investment 20.440.000.00 2.280.849.500.290.00 (150.890.50 3.Variable Cost 13 -Land reclaiming -Charitable expense 12 Tax at 38% 13 Net Income 0.00 9.Year 1 2 3 4 New Mining Equipment Price ($/unit) OEM Replacement 38 59 39.50 6.51 41.400.62 61.00) (170.000.00) 19.00) 0.400.00 10.000 0 1 2 3 4 Year 0 Year 1 Year 2 Year 3 Year 4 Investments: 1 New Mining Equipment ### 2 Accumulated depreciation Adjusted basis of new mining 3 equipment after depreciation (end of year) 4 Opportunity Cost 25.160.00 2.620.00 16.00 9 Operating Costs: .500.250.00 18.000.360.327.130.00 .00 5.997.

(38%($18.* The taxable amount $8. The aftertax salvage value is $18.000) .8 .360)) = $ 14.000 .$9.360.000-$9.716.640 = (60% x 30.

00) 0.439.20 Cash Outflow (6.00 Present Value 0.720.000.439.20 6.00) Net Cash Flow (35.000.00) (4.57 .795 19.00) 4.12 1.437 17.440 51.000.000.8929 3.0000 (35.920 85.000.910 22.00 DCF 3.000.00 2.045 24.160 16.963.00) 4.Sales revenue ($) OEM Replacement Total Sales Revenue 33.360 ### ### 105.529 ### ### 119.00) - Total Outflow (35.825 ### ### 112.657 Year 1 2 3 4 Varia ble Cost per 18 unit 19 20 20 Variable Cost OEM Replacement 15.280.843 21.840 20.00 (4.000.000.239 In thousand USD 5 6 Year 5 Year 6 - 1 Net Present Value Cash Inflow Total Inflow 4.

08 3.000.54) 2 IRR 0.80) 4 Profitability Index PV Cash Inflow PV Cash Outflow Profitability Index (35.833.00) (30.59 0.000.04 3 Payback Period Accumulated NCF 10.95 Average investment= 5.57 - .33 AAR= 6 Modified IRR 0.560.459.716.963.38 (35.38%($18.67) 5 Average Accounting Return Average net income= 3.590.360)) = $ 14.00) (0.8 NPV (6.000-$9.

40 (170.60 19.281 40.7972 0.797.40 6.6355 2.000.00) 6.00) (4.79 (4.40 0.00 3.76 4.284 3.51 16.352.269.71) 3.5674 (2.137.647.000.907.50 6.00 0.80 26.522.67 .7118 0.5066 1.Total Variable Cost 36.720.884.280.00) 0.610.000 38.706 43.00) 3.50 (150.521.720.856.

50 3.576.52 (121.991.30) 3.43 (2.(26.296.027.58) (20.269.619.642.90) 4.50 5.884.576.560.67 12.50 1.71) 1.913.34 (119.00) 5.36 - - .

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