# Discounted Cash Flow Analysis

Investment
\$300,000
Annual Return
\$42,577
Discount Rate
9.00%
NPV
IRR
Payback

(\$26,755)
6.9%
9.9

DISCOUNTED CASH FLOW
Yr
Cash Flow
Disc. rate
1+ rate
Exponent

0
(300,000)
9.00%
1.09
0

(1+int rate)n
PV = value / (1+int rate)n CF
Cum'l CF
PV Alternative Calc.

1
42,577
9.00%
1.09
1

2
42,577
9.00%
1.09
2

3
42,577
9.00%
1.09
3

1.00
(300,000)
(300,000)

1.09000
39,061
(260,939)

1.19
35,836
(225,102)

(300,000)

39,061

35,836

4
42,577
9.00%
1.09
4

5
42,577
9.00%
1.09
5

1.30
32,877
(192,225)

1.41
30,163
(162,062)

32,877

30,163

6

7

8

9

Sub Total
Total

10

42,577
9.00%
1.09
6

42,577
9.00%
1.09
7

42,577
9.00%
1.09
8

42,577
9.00%
1.09
9

42,577
9.00%
1.09
10

1.54
27,672
(134,390)

1.68
25,387
(109,003)

1.83
23,291
(85,712)

1.99
21,368
(64,344)

2.17
19,604
(44,740)

2.37
17,985
(26,755)

27,672

25,387

23,291

21,368

19,604

17,985

(26,755)
(26,755)

---NPV ---Excel calc.

Simple Payback = Investment / Annual return
Internal Rate Of Return
Discounted Payback - calculate using discounted returns
example number of whole years
Fraction of last year
DCF payback

7.05 years
6.9%
4
5.9
9.9

00% NPV IRR Payback \$955.000 Cost Detail Capital 500.00% \$955.7% .000 Total 600.000) (300.000) (300.000 FINANCIAL SUMMARY Cost of Capital Weighted Average Cost of Capital Discount Rate Net Present Value (NPV) Internal Rate Of Return (IRR) Simple Payback Discounted Payback 9.17% 9.7% 1.000) 9.000 \$195.09 0 (1+int rate)n PV = value / (1+int rate) CF Cum'l CF n PV Alternative Calc.4 Yr Cash Flow Disc.000) 1.065 64.564 9.53 years 64. Simple Payback = Investment / Annual return Internal Rate Of Return 1.00% 1.065 64.00 (300.PROJECT: Current \$300.7% 1.000 Expense 100.53 1.4 Discounted Cash Flow Analysis Investment Annual Return Discount Rate \$300. rate 1+ rate Exponent 0 (300.

4 .6 1.Discounted Payback .calculate using discounted returns example number of whole years Fraction of last year DCF payback 4 -2.

031 1.00% 1.564 9.583) 1.00% 1.543 333.609 .543 127.564 9.09 5 6 195.564 9.68 116.09 3 4 195.012 195.000 DISCOUNTED CASH FLOW 1 195.564 9.000 \$200.417 (120.00% 1.417 164.609 577.54 127.30 151.Cash Outflows \$400.19 164.09 2 3 195.000 \$300.41 138.012 138.09 6 1.564 9.00% 1.603 44.103 116.677 1.09000 179.09 1 2 195.00% 1.286 179.574 1.103 460.09 4 5 195.00% 1.564 9.603 151.019 1.

.

608 Sub Total Total 955.564 9.DISCOUNTED CASH FLOW 7 195.147 90.564 9.266 1.043 872.83 106.17 90.09 9 10 195.980 98.043 82.00% 1.00% 1.564 9.37 82.00% 1.065 106.09 8 9 195.065 ---NPV ---Excel calc.09 10 1.065 955. .608 955.564 9.09 7 8 195.456 2.00% 1.147 782.99 98.413 2.980 684.

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1 Yr Cash Flow Disc.000 Expense 100. Simple Payback = Investment / Annual return Internal Rate Of Return 5.000 Cost Detail Capital 500.00% NPV IRR Payback \$27.014 11.0% 8.1 Discounted Cash Flow Analysis Investment Annual Return Discount Rate \$300.89 11.000 Total 600.955 9.00% \$27.PROJECT: Current \$300.000 \$50.89 8.000 FINANCIAL SUMMARY Cost of Capital Weighted Average Cost of Capital Discount Rate Net Present Value (NPV) Internal Rate Of Return (IRR) Simple Payback Discounted Payback 9.0% 5.17% 9.0% . rate 1+ rate Exponent (1+int rate)n PV = value / (1+int rate)n CF Cum'l CF PV Alternative Calc.014 11.

Discounted Payback .1 8.1 .calculate using discounted returns example number of whole years Fraction of last year DCF payback 4 4.

09 1 50.-257427 -214854 42.364) 1.955 9.05) DISCOUNTE 0 (300.00% 1.748 42.347 (171.54 33.748 (253.919) 1.000) 9.09000 46.888 39.00% 1.955 9.347 36.888 (210.09 4 50.955 9.09 5 1.017) 1.573 -257427 -214854 (172.000) 46.955 9.00 (300.098 33.30 39.09 3 50.989) 40.41 36.584 (\$0.00% 1.09 0 years 1 2 3 4 5 50.135) (44.117 (101.708) (87.19 42.098 (134.562) (1.252) 1.281) (129.000) 1.00% 1.00% 1.955 9.00% 1.09 2 50.802) (300.117 .000) (300.

.

014 ---NPV ---Excel calc.000 \$300.955 9.00% 1.09 8 9 50.00% 1.419) 1.014 27.000 \$200.490 2.955 9.99 25.461 5.68 30.09 10 1.524 27.955 9.00% 1.09 9 10 50. .544) 1.00% 1.17 23.524 Sub Total Total 27.383 27.971) 2.874 25.00% 1.573 (17.014 30.000 DISCOUNTED CASH FLOW 6 50.461 21.955 9.Cash Outflows \$400.573 23.955 9.09 7 8 50.37 21.83 27.383 (71.09 6 7 50.874 (43.

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Rf) Ke = .04+ 1.0% 12.5 16.Capital Structure Bank Loans Equity Capital Asset Pricing Model Rf Rm beta CAPM formula: Ke = Rf + b(Rm .0% .12 .5(.0% 16.0% 1.866 235.08) Ke = ..04+ .5(.805 4.04) Ke = .04+ 1.12 Ke = 965.