Projected Cashflow

Year 2016 Year 2017 Year 2018 Year 2019 Year 2020 Year 2021
Sales 4 10 10 10 10
Cost -3 -7.5 -7.5 -7.5 -7.5
Operation Saving 2 3.5 3.5 3.5 3.5
SG&A -0.2 -0.5 -0.5 -0.5 -0.5
Depreciation -3 -3 -3 -3 -3
EBIT -0.2 2.5 2.5 2.5 2.5
Tax 0.08 -1 -1 -1 -1
NOPAT -0.12 1.5 1.5 1.5 1.5
Depreciation 3 3 3 3 3
Net Op. Cashflow 2.88 4.5 4.5 4.5 4.5
Year 2016 Year 2017 Year 2018 Year 2019 Year 2020 Year 2021
Initial Cost -16 -2 0 0 0 0
Operation Cashflow 0 2.88 4.5 4.5 4.5 4.5
NOWC CF -0.4 -0.6 0 0 0 0
Salvage CF 0 0 0 0 0 0
Net CF -16.4 0.28 4.5 4.5 4.5 4.5

Net Operating Cashflow

Salvage Cashflow at 2022 Sales NOWC CF
Book value of asset after 5 years 0 Year 2016 0 0.4 -0.4
Expect Salvage Value 1.8 Year 2017 4 1 -0.6
Accounting Before Tax Loss 1.8 Year 2018 10 1 0
Tax 40% 0.72 Year 2019 10 1 0
Net Profit from Salvage Sales 1.08 Year 2020 10 1 0
Salvage Cashflow 1.08 Year 2021 10 1 0
Year 2022 10 0 1
Year 2022 COGS
10 0% NPV 2.23 65% 70% 75% 80%
-7.5 75% -2%
3.5 -1%

Inflation
-0.5 5% 0%
-3 -3 1%
2.5 2%
-1 40% 3%
1.5
3 COGS
4.5 IRR 11% 65% 70% 75% 80%
Year 2022 -2%
0 -1%

Inflation
4.5 0%
1 10% 1%
1.08 2%
6.58 3%

COGS
MIRR 10% 65% 70% 75% 80%
-2%
-1%
Inflation

0%
1%
2%
3%

COGS
DPB 4.58 65% 70% 75% 80%
-2%
-1%
Inflation

0%
1%
2%
3%
GS
85% 90%

GS
85% 90%

GS
85% 90%

GS
85% 90%
Interest Rate : January 15, 2016
Bank Loan Rates (LIBOR) Market Risk Premium
1-Year 1.15% Historical Average 6.00%

Government Bonds Corporate Bonds (10-Year Maturity)

1-Year 0.49% AAA 2.45%
5-Year 1.46% AA 3.38%
10-Year 2.04% A 3.85%
30-Year 2.82% BAA 5.05%

WWPC Financial Data

Balance-Sheet Account (million$) Per-share Data
Bank Loan Payable(LIBOR+1%) 500 Share Outstanding(Millions) 500
Long-Term Debt 2500 Book Value per Share 5
Common Equity 500 Recent Market Value per Share 24
Retained Earnings 2000 Other
Bond Rating A
Beta 1.1

Weighted Average Cost of Capital 7.37%

Wd 0.20 Weighted Market Value of Debt 3,000
Cost of Debt 3.85% Number of Share outstanding 500
Cost of Debt after Tax(40%) 2.31% Recent Market Value per Share 24
We 0.80 Weighted Market Value of Equity 12,000
Cost of Equity 8.64% Market Value of Equity and Debt 15,000
Weighted Average Cost of Capital
Cost of Debt 3.85% Cost of Equity 8.64%
Bank Loan Payable(LIBOR+1%) 500 Risk Free Rate from 10Y Government 2.04%
Long-Term Debt 2,500 Market Risk Premium 6.00%
Total Debt 3,000 Beta 1.10
 0 1 2 3 4 5 6
Year 2016 Year 2017 Year 2018 Year 2019 Year 2020 Year 2021 Year 2022
Net CF -16.40 0.28 4.50 4.50 4.50 4.50 6.58
Discount -16.40 0.26 3.90 3.64 3.39 3.15 4.29
NPV 2.23
IRR 10.91%
FV(+CF) 28.55 0.40 5.98 5.57 5.19 4.83 6.58
MIRR 9.68%
PB 4.58
DPB 5.65