year CF IRR

1 -60 25.00%
2 155
3 -100

NPV profile
disc rate NPV ₹0.50
5% ₹ -2.94
10% ₹ -1.58 ₹0.00
15% ₹ -0.72 0% 5% 10%
20% ₹ -0.23
( ₹0.50)
23% ₹ -0.07
25% ₹ 0.00
30% ₹ 0.05 ( ₹1.00)
34% ₹ -0.01
35% ₹ -0.04 ( ₹1.50)
40% ₹ -0.22
45% ₹ -0.46
( ₹2.00)

IRR1 IRR2
25.00% 33.33% ( ₹2.50)

( ₹3.00)

( ₹3.50)
 Chart Title
0

0
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

0)

0)

0)

0)

0)

0)

0)
45% 50%
year cost sales operating margin CF
0 150000 -150000
1 60000 1000000 100000 40000
2 60000 1000000 100000 40000
3 60000 1000000 100000 40000
4 60000 1000000 100000 40000
5 60000 1000000 100000 40000
6 60000 1000000 100000 40000
7 60000 1000000 100000 40000
8 60000 1000000 100000 40000
9 60000 1000000 100000 40000
10 60000 1000000 100000 40000

NPV= ₹ 76,008.92
year cost value of shop sales opex tax
0 50000
1 15000 7500 3000
2 15750 7875 3150
3 16537.5 8268.75 3307.5
4 17364.375 8682.1875 3472.875
5 10000 18232.59375 9116.296875 3646.51875

1 2 3 4 5
ATCF 7700 7925 8161.25 8409.31 8669.78
PV ₹ 6,875.00 ₹ 6,317.76 ₹ 5,809.02 ₹ 5,344.27 ₹ 4,919.47

NPV -50000 ₹ 29,265.51 ₹ 5,674.27

NPV= -15060.2189

PV of additonal sales
year additional sales pre tax op margin after tax op margin
0
1 20000 8000 4800
2 22000 8800 5280
3 24200 9680 5808
4 26620 10648 6388.8
5 29282 11712.8 7027.68
NPV= ₹ 20,676.81

net effect= ₹ 5,616.59

profit additional book sales operating margin tax profit

4500 20000 8000 3200 8800

4725 22000 8800 3520 9680
4961.25 24200 9680 3872 10648
5209.3125 26620 10648 4259.2 11712.8
5469.77813 29282 11712.8 4685.12 12884.08

NPV
assuming disc rate 10%

Total

₹ 29,265.51 ₹ 29,265.51
CF of coffee shop only total CF
-50000 -50000
4500 13300
4725 14405
4961.25 15609.25
5209.3125 16922.1125
15469.778125 28353.858125

₹ -25,113.13 ₹ 14,886.87

YES OPEN THE COFFEE SHOP

year cost 1 cost 2 cost 3
0 -12000 -5000 -3500
1 -500 -1000 -1200
2 -500 -1000 -1200
3 -500 -1000 -1200
4 -500 -1000 -1200
5 -500 -1000 -1200
6 -500 -1000 -1200
7 -500 -1000 -1200
8 -500 -1000 -1200
9 -500 -1000 -1200
10 -500 -1000 -1200
11 -500 -1000 -1200
12 -500 -1000 -1200
13 -500 -1000 -1200
14 -500 -1000 -1200
15 -500 -1000 -1200
16 -500 -1000
17 -500 -1000
18 -500 -1000
19 -500 -1000
20 -500 -1000
INFINITE

-17000 ₹ -13,513.56 ₹ -12,627.30

-1700 ₹ -1,587.30 ₹ -1,660.16

market size 100000000 year cost
market share 10% 10000000 0 -10000000
fixed cost per year 2000000 1 -1000000
Var cost 40% of revenues 2 -1000000
tax rate 40% 3 -1000000
new mkt share 20% 20000000 4 -1000000
investment 10000000 5 -1000000
lifetime 10 yrs 6 -1000000
advertising expense 1000000 per year 7 -1000000
8 -1000000
9 -1000000
10 -1000000

initial investment 11000000

incremental revenue 10000000

var cost 4000000
advt cost 1000000
depreciation 1000000
taxable income 4000000
taxes 1600000
after tax income 2400000
add back depreciation 1000000
after tax CF 3400000

initial investment 11000000

annual CF 3400000
PV of annual CF ₹ 22,814,276.76
Working capital 1000000
PV of working capital ₹ 463,193.49
NPV ₹ 12,277,470.24
revenue fixed costs var cost income taxes net income (or) CF
-10000000
20000000 2000000 8000000 10000000 4000000 6000000
20000000 2000000 8000000 10000000 4000000 6000000
20000000 2000000 8000000 10000000 4000000 6000000
20000000 2000000 8000000 10000000 4000000 6000000
20000000 2000000 8000000 10000000 4000000 6000000
20000000 2000000 8000000 10000000 4000000 6000000
20000000 2000000 8000000 10000000 4000000 6000000
20000000 2000000 8000000 10000000 4000000 6000000
20000000 2000000 8000000 10000000 4000000 6000000
20000000 2000000 8000000 10000000 4000000 6000000
c. Van
1800
₹ 6,823.42

d. atcf
initial investment 500000

revenue 400000
op cost 160000
Depreciation 100000
EBIT 140000
taxes 56000
income after tax 84000
add back deprec 100000
ATCF 184000

e. NPV
initial investment 500000
PV of atcf ₹ 697,504.77
opp cost of salary 62589
opp cost of capacity 54126
opp cost of van 6823
WC 0
NPV ₹ 73,966.77