Project Life T0 T1 T2 T3 T4 T5

Inventory -2,000,000 -2,000,000 -2,000,000 -2,000,000 -2,000,000 0

Working Capital -2,000,000 -2,000,000 -2,000,000 -2,000,000 -2,000,000 0

Change in NWC -2,000,000 0 0 0 0 2,000,000 0

Invest Recovery

Plant Disposal:
Liquidation Value 1,000,000

Book Value:
Cost 10,000,000

Total Dep. -5000000 5,000,000

Liquidation Loss -4,000,000

Income Tax Rate -40%

Income Tax 1,600,000

Net Cash From Liquidation 2,600,000

 Project Life T0
COGS Unit 45 New Sales
50% Incremental Fixed Cost 425000 Lost Sales 15000*55
Net Sales
Sales 50,000 5 Years New COGS
Price 100 / Unit COGS Saving
Net COGS
Existing Products: Gross Profit
Cann. Ratio 30% of Forecasted Sales Fixed Cost
Cann. Units 15000 Depreciation
Existing Price 55 1000000
Existing Cost 25 EBIT
Income Tax 40%
Net Income
FCF:
CAPEX -10,000,000
Add Back Dep.
Changes in NWC -2000000
Free Cash Flow (FCF) (12,000,000.00)

T0
Ending Inventory Bal. 2000000
Net Working Capital -2000000
(Liab - Assets)
Changes in NWC -2000000
(Current - Previous) Investment
 3Com Cash Flows Layout
T1 T2 T3 T4 T5
5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
-825000 -825000 -825000 -825000 -825000
4,175,000 4,175,000 4,175,000 4,175,000 4,175,000
-2250000 -2250000 -2250000 -2250000 -2250000
375000 375000 375000 375000 375000
(1,875,000) (1,875,000) (1,875,000) (1,875,000) (1,875,000)
2,300,000 2,300,000 2,300,000 2,300,000 2,300,000
-425000 -425000 -425000 -425000 -425000
-1000000 -1000000 -1000000 -1000000 -1000000

875,000 875,000 875,000 875,000 875,000

-350000 -350000 -350000 -350000 -350000
525,000 525,000 525,000 525,000 525,000

2,600,000
1000000 1000000 1000000 1000000 1000000
0 0 0 0 2000000
1,525,000.00 1,525,000.00 1,525,000.00 1,525,000.00 6,125,000.00

End of Operation
T1 T2 T3 T4 T5
2000000 2000000 2000000 2000000 0
-2000000 -2000000 -2000000 -2000000 0

0 0 0 0 2000000 0
Recover
 Incremental Type of Cost (One
Cost Item /Sunk Purpose time / Frequent)
Feasibility study Sunk
Forecasted Sales Incr. Operation 26 M / Per Year
4 Years
Cost of Sales Incr. Operation 11 M/ Per Year

4 Years
2
R&D
Design Cost Incr. Opex Setup 5 m / One time
3

Engineers Cost Incr. Opex Setup 10 m / One time

200,000 X 50
New Equipment Incr. Capex Setup 7.5 m / One time
(Life 5 Years)

Depreciation Incr. Operation 1.5 m / Year

5 Years
Marketing and Support Incr. Operation 2.8 m/ Year
4 Years

1
2
3
4
 HomeNet
Cash Flows Layout
Setup Operation
OPEX T0 T1 T2 T3 T4

Forecasted Sales 0 26,000,000 26,000,000 26,000,000 26,000,000

Lost Sales (25000 * 100) -2,500,000 -2,500,000 -2,500,000 -2,500,000
Net Sales 23,500,000 23,500,000 23,500,000 23,500,000
Cost of Sales (COGS) 0 -11,000,000 -11,000,000 -11,000,000 -11,000,000
Cost Saving (25000*60) 1,500,000 1,500,000 1,500,000 1,500,000
Net COGS -9,500,000 -9,500,000 -9,500,000 -9,500,000
Gross Profit (GP) 0 14,000,000 14,000,000 14,000,000 14,000,000
Depreciation 0 -2,500,000 -1,500,000 -1,500,000 -1,500,000
Marketing and Support 0 -2,800,000 -2,800,000 -2,800,000 -2,800,000
Design Cost -5,000,000
Engineers Cost -10,000,000
Earnings Before Interest and Tax -15,000,000 8,700,000 9,700,000 9,700,000 9,700,000
(EBIT)
Income Tax Rate - 40% 6,000,000 -3,480,000 -3,880,000 -3,880,000 -3,880,000
EBIT * - 40% Saving Tax Payment
Unlevered Net Income -9,000,000 5,220,000 5,820,000 5,820,000 5,820,000
Earning After-Tax but Before Interest
Opportunity Cost:

Lost Rent 200,000 - (200,000 * 40%) -120,000 -120,000 -120,000 -120,000

Rent 200,000 * (1-40%)
200,000 * 60%
Adjusted Unlevered NI -9,000,000 5,100,000 5,700,000 5,700,000 5,700,000

CAPEX : New Equipment -7,500,000

Add Back: Depreciation (Non Cash) 2,500,000 1,500,000 1,500,000 1,500,000
Liquidation Value -1,600,000
Changes in NWC:
Receivables 15% Sales (Negative) -3,525,000 -3,525,000 -3,525,000 -3,525,000
Payables 15% COGS (Positive) 1,425,000 1,425,000 1,425,000 1,425,000
Total WC -2,100,000 -2,100,000 -2,100,000 -2,100,000
Change in NWC -2,100,000 0 0 0

HomeNet FCF -18,100,000 5,500,000 7,200,000 7,200,000 7,200,000

r=12%
Pv Factor 1 $0.89 $0.80 $0.71 $0.64
DCF -18100000 4910714.29 5739795.92 5124817.78 4575730.16
Total Present values of FCF T1:Tn 22,155,476
Investment Cost (T0) -18,100,000
Net Pesent Value 4,055,476
Accept
Profitabiity Index - PI 122%
 Second Secanrio
HomeNe
Cash Flows La
Termination Setup Operation
T5 OPEX T0 T1
Sales - Units 100,000
Cann Units 25% 25,000
EX Product Price $ 100.00
EX Product Cost $ 60.00
HomeNet Selling Price $ 260.00
HomeNe Cost Per Unit $ 110.00
0 Forecasted Sales 0 26,000,000
Lost Sales (25%) -2,500,000
Net Sales 23,500,000
0 Cost of Sales (COGS) 0 -11,000,000
Cost Saving (25000*60) 1,500,000
Net COGS -9,500,000
0 Gross Profit (GP) 0 14,000,000
-1,500,000 Depreciation 0 -1,500,000
0 Marketing and Support 0 -2,800,000
Design Cost -5,000,000
Engineers Cost -10,000,000
-1,500,000 Earnings Before Interest and Tax -15,000,000 9,700,000
(EBIT)
600,000 Income Tax Rate - 40% 6,000,000 -3,880,000
Saving EBIT * - 40% Saving Tax Payme
-900,000 Unlevered Net Income -9,000,000 5,820,000
Earning After-Tax but Before Interest
Opportunity Cost: -200,000

Lost Rent 200,000 - (200,000 * 40%) -120,000

Rent 200,000 * (1-40%)
200,000 * 60%
-900,000 Adjusted Unlevered NI -9,000,000 5,700,000

CAPEX : New Equipment -7,500,000

1,500,000 Add Back: Depreciation (Non Cash) 1,500,000
480,000 3 Liquidation Value -1,600,000
4 Changes in NWC:
0 Receivables 15% Sales (Negative) -3,525,000
0 Payables 15% COGS (Positive) 1,425,000
0 Total WC -2,100,000
2,100,000 0 Change in NWC -2,100,000

3,180,000 HomeNet FCF -18,100,000 5,100,000

r=12%
 $0.57 Pv Factor 1 $0.89
1804417.4 DCF -18100000 4553571.43
Total Present values of FCF T1:Tn 19,079,269
Investment Cost (T0) -18,100,000
Net Pesent Value 979,269
Accept
Profitabiity Index - PI 105%
ond Secanrio
HomeNet
Cash Flows Layout
Operation Termination
T2 T3 T4 T5
125,000 125,000 50,000
31,250 31,250 12,500
90 81 73
54 49 44
$ 234.00 $ 210.60 $ 189.54
$ 99.00 $ 89.10 $ 80.19
29,250,000 26,325,000 9,477,000 0
-2,812,500 -2,531,250 -911,250
26,437,500 23,793,750 8,565,750
-12,375,000 -11,137,500 -4,009,500 0
1,687,500 1,518,750 546,750
-10,687,500 -9,618,750 -3,462,750
15,750,000 14,175,000 5,103,000 0
-1,500,000 -1,500,000 -1,500,000 -1,500,000
-2,912,000 -3,028,480 -3,149,619 0

11,338,000 9,646,520 453,381 -1,500,000

-4,535,200 -3,858,608 -181,352 600,000

Tax Payment Saving
6,802,800 5,787,912 272,028 -900,000

-208000 -216320 -224972.8

-124,800 -129,792 -134,984

6,678,000 5,658,120 137,045 -900,000

1,500,000 1,500,000 1,500,000 1,500,000

480,000

-3,965,625 -3,569,063 -1,284,863 0

1,603,125 1,442,813 519,413 0
-2,362,500 -2,126,250 -765,450 0
-262,500 236,250 1,360,800 765,450 0

7,915,500 7,394,370 2,997,845 1,845,450

 $0.80 $0.71 $0.64 $0.57
6310188.14 5263166.51 1905184.57 1047157.891 i
 T0 T1 T2 T3 T4
Units 50 50 50 50
Price 30,000 30,000 30,000 30,000
Cost 26,000 26,000 26,000 26,000
Audi Sales 1500000 1500000 1500000 1500000
Audi COGS -1300000 -1300000 -1300000 -1300000
Audi GP 200,000 200,000 200,000 200,000
Fixed Salaries -60,000 -60,000 -60,000 -60,000
Var. Salaries -75000 -75000 -75000 -75000
Depreciation -40000 -40000 -40000 -40000
EBIT 25,000 25,000 25,000 25,000
Income Tax -10000 -10000 -10000 -10000
Net Income 15000 15000 15000 15000
FCF:
CAPEX -200,000
Depreciation 40000 40000 40000 40000
Changes in NWC:
Inventory -520000 -520000 -520000 -520000 -520000
Changes in NWC: -520000 0 0 0 0

FCF -720,000 55,000 55,000 55,000 55,000

r=12%
Pv Factor 1 $0.89 $0.80 $0.71 $0.64
DCF -720000 $49,107.14 43845.6633 39147.9136 34953.4943
Total Present values of FCF T1:Tn 510,347
Investment Cost (T0) -720,000
Net Pesent Value -209,653 Reject
Profitabiity Index - PI 71% Reject
Net Cash Received from Liquidation:

Liquidation Value 50,000

Book Value
Cost 200,000
T.Dep. -200000 0

Gain 50,000

Tax Rate -40%

Income Tax -20,000

Net Cash Received from Liquidation: 30,000

 T5
50
30,000
26,000
1500000
-1300000
200,000
-60,000
-75000
-40000
25,000 -
-10000
15000

30,000
40000

0
520000 0

605,000

$0.57
343293.248
 New Produ

20,000,000
10,000,000

80%
80%
80%
80% of Net Sales
20% of Sales
 New Product = Spicy
Spicy Sales 8,000,000
Lost Sales Salty -4,000,000
Lost Sales French -500,000
Net Sales 3,500,000
COGS Spicy -6,400,000
Slaty COGS Saving 3,200,000
French COGS Saving 400,000
Net COGS -2,800,000
Gross Profit 700,000
 I. Earnings Forecasting (OPEXS)
T0 T1 T2 T3
Sales 50,000 * 4 200,000 200,000 200,000
COGS 50,000 * 2.5 -125,000 -125,000 -125,000
Gross Profit 75,000 75,000 75,000
Fixed Costs -12,000 -12,000 -12,000
Depreciation -30,000 -30,000 -30,000
90,000/3
EBIT 33,000 33,000 33,000
Income Tax -11,220 -11,220 -11,220
Unlevered Net Income 21,780 21,780 21,780
 This Year Next Year
T0 T1
Sales Min Munch 9000000 7000000
Sales Other Products 2000000 2000000
Total Sales 11000000 9000000
COGS Min Munch 65% -5850000 -4550000
COGS Other Products 75% -1500000 -1500000
Total COGS -7350000 -6050000
Gross Profit 3650000 2950000
Advertising -5000000 0
EBIT -1350000 2950000
Income Tax 472500 -1032500
Net Income -877500 1917500
 Y1 Y2 Y3
Tax Depreciation Rate: 50% 30% 20%

HomeNet
Cash Flows Layout
Setup Operation
OPEX T0 T1 T2 T3 T4
Forecasted Sales 0 26,000,000 26,000,000 26,000,000 26,000,000
Lost Sales (25000 * 100) -2,500,000 -2,500,000 -2,500,000 -2,500,000
Net Sales 23,500,000 23,500,000 23,500,000 23,500,000
Cost of Sales (COGS) 0 -11,000,000 -11,000,000 -11,000,000 -11,000,000
Cost Saving (25000*60) 1,500,000 1,500,000 1,500,000 1,500,000
Net COGS -9,500,000 -9,500,000 -9,500,000 -9,500,000
Gross Profit (GP) 0 14,000,000 14,000,000 14,000,000 14,000,000
Depreciation 0 -3,750,000 -2,250,000 -1,500,000 0
Marketing and Support 0 -2,800,000 -2,800,000 -2,800,000 -2,800,000
Design Cost -5,000,000
Engineers Cost -10,000,000
Earnings Before Interest and Tax -15,000,000 7,450,000 8,950,000 9,700,000 11,200,000
(EBIT)
Income Tax Rate - 40% 6,000,000 -2,980,000 -3,580,000 -3,880,000 -4,480,000
EBIT * - 40% Saving Tax Payment
Unlevered Net Income -9,000,000 4,470,000 5,370,000 5,820,000 6,720,000
Earning After-Tax but Before Interest
Opportunity Cost:

Lost Rent 200,000 - (200,000 * 40%) -120,000 -120,000 -120,000 -120,000

Rent 200,000 * (1-40%)
200,000 * 60%
Adjusted Unlevered NI -9,000,000 4,350,000 5,250,000 5,700,000 6,600,000

CAPEX : New Equipment -7,500,000

Add Back: Depreciation (Non Cash) 3,750,000 2,250,000 1,500,000 0
Termination
T5
0

0
0
0

0
Saving
0

0
 20000*350
20000*75
20000*200
1500000*0.30

1500000*0.70

25000*300
25000*75
25000*200

Incremental increase or decrease in earnings as

 Befor Price Dropping Units 20,000
T1 T2 T3
Sales Printers 7,000,000
Sales Ink 1,500,000 1,500,000 1,500,000
COGS Printers 200 -4,000,000
COGS INK 30% -450,000 -450,000 -450,000
GP Printers 3,000,000 - -
GP Ink 1,050,000 1,050,000 1,050,000
Total GP (EBIT) 4,050,000 1,050,000 1,050,000

After Price Dropping 25,000, One Year Price Dropping

T1 T2 T3
Sales Printers 7,500,000
Sales Ink 1875000 1875000 1875000
COGS Printers 200 -5000000
COGS INK 30% -562500 -562500 -562500
GP Printers 2,500,000
GP Ink 1,312,500 1,312,500 1,312,500
Total GP (EBIT) 3,812,500 1,312,500 1,312,500

Incremental EBIt (237,500) 262,500 262,500

l increase or decrease in earnings as result of Price Dropping
 A
Sales Printers 7,000,000
Cogs - Printers -4000000
GP 3,000,000

Sales Printer 7,500,000

Cogs - Printers -5000000
GP 2,500,000

Decreae GP (500,000)
 T0 T1 T2
Sales 10,000,000 10,000,000
Cogs (7,000,000) (7,000,000)
Gross Profit 3,000,000 3,000,000
Depreciation (275,000) (275,000)
Salaries (2,000,000) (2,000,000)
EBIT 725,000 725,000
Income Tax (217,500) (217,500)
Net Income 507,500 507,500
CPAEX (2,750,000)
Add Back Dep. 275,000 275,000
Change in NWC - (1,800,000) -
FCF (2,750,000) (1,017,500) 782,500

T0 T1 T2

Inventory -1,000,000 -1,000,000

Receivables -1,500,000 -1,500,000
Payables 700,000 700,000
Total WC -1,800,000 -1,800,000
Change in NWC -1,800,000 0

Liquidation Value 100,000

Book Value
Cost 2,750,000
T.Dep. -1,650,000 1,100,000
Loss -1,000,000

Income Tax Rate -30%

Income Tax 300,000

Net Cash 400,000

 T3 T4 T5 T6 T7
10,000,000 10,000,000 10,000,000 10,000,000
(7,000,000) (7,000,000) (7,000,000) (7,000,000)
3,000,000 3,000,000 3,000,000 3,000,000
(275,000) (275,000) (275,000) (275,000)
(2,000,000) (2,000,000) (2,000,000) (2,000,000)
725,000 725,000 725,000 725,000
(217,500) (217,500) (217,500) (217,500)
507,500 507,500 507,500 507,500
400,000
275,000 275,000 275,000 275,000
- - - 1,000,000 800,000
782,500 782,500 782,500 2,182,500 800,000

T3 T4 T5 T6 T7

-1,000,000 -1,000,000 -1,000,000

-1,500,000 -1,500,000 -1,500,000 -1,500,000 0
700,000 700,000 700,000 700,000 0
-1,800,000 -1,800,000 -1,800,000 -800,000 0
0 0 0 1,000,000 800,000
r = 10%

T0 T1 T2 T3 T4 T5
FCF -150000 40,359.00 44,184.00 41,559.00 39,684.00 38,349.00
Pv Factor 1 0.91 0.83 0.75 0.68 0.62
DCF -150000 36,690 36,516 31,224 27,105 23,812
Total Present values of FCF 242,194
Investment Cost (T0) -150000
Net Pesent Value 92,194
Profitabiity Index - PI 161%
r = 20%

T0 T1 T2 T3 T4 T5
FCF -150,000 40359 44184 41559 39684 38349
Pv Factor 1 0.83 0.69 0.58 0.48 0.40
DCF -150000 33,633 30,683 24,050 19,138 15,412
Total Present values of FCF 167,975
Investment Cost (T0) -150000
Net Pesent Value 17,975
Profitabiity Index - PI 112%
r = 25%

T0 T1 T2 T3 T4 T5
FCF -150,000 40359 44184 41559 39684 38349
Pv Factor 1 0.80 0.64 $0.51 0.41 0.33
DCF -150000 32,287 28,278 21,278 16,255 12,566
Total Present values of FCF 143,904
Investment Cost (T0) -150000
Net Pesent Value (6,096)
Profitabiity Index - PI 96%
 T6 T7 T8 T9
38,349.00 38,349.00 36,671.00 67,000.00
0.56 0.51 0.47 0.42
21,647 19,679 17,107 28,415

T6 T7 T8 T9
38349 38349 36671 67000
0.33 0.28 0.23 0.19
12,843 10,703 8,529 12,985

T6 T7 T8 T9
38349 38349 36671 67000
0.26 0.21 0.17 0.13
10,053 8,042 6,152 8,993
r=10% T0 T1 T2 T3 T4 T5 T6
FCF -100.000 20.000 20.000 20.000 20.000 20.000 20.000
Pv Factor 1.000 0.909 0.826 0.751 0.683 0.621 0.564
DCF -100.000 18.182 16.529 15.026 13.660 12.418 11.289
Total Present values of FCF 97
Investment Cost (T0) -100
Net Pesent Value -2.63
Reject
Profitabiity Index - PI 97%
Reject
r=10% T0 T1 T2 T3 T4 T5 T6
FCF -100.000 20.000 20.000 20.000 20.000 20.000 20.000
Pv Factor 1.000 0.909 0.826 0.751 0.683 0.621 0.564
DCF -100.000 18.182 16.529 15.026 13.660 12.418 11.289
Total Present values of FCF 107
Investment Cost (T0) -100
Net Pesent Value 6.61
Accept
Profitabiity Index - PI 107%
Accept
 T7
20.000
0.513
10.263

T7 Liquidation
38.000 Market Value 30.000
0.513 Book Value
19.500 Cost 100
Total Dep -100 0
Gain 30.000
Tax -12.000
Net Cash
Market Value 30.000
Tax -12.000
18.000