SBR – Gro up 2

Date 2023, April 06 CEO: Jorge Vásconez

COHORT NAME MGB; Group 2 Group Anjusha Nath
& Group No. Members: Ankit Jindal
Swastik Shetty
Date 2023, April 06 CEO: Jorge Vásconez
COHORT NAME MGB; Group 2 Group Anjusha Nath
& Group No. Members: Ankit Jindal
Swastik Shetty
sconez
Nath
dal
Shetty
sconez
Nath
dal
Shetty
 Year 0 1
Tax 35% Plan and Equp -6
Rate 12% Depreciation 1.2
Working Capital Required -0.2 -0.24
Working Capital Cashflow -0.2 -0.04
Sales (Units) 0.5
Sales ($) 2
Production Cost 0.75
EBITDA 1.25
Dep 1.2
PBIT 0.05
Interest 0
PBT / Profit Before Tax 0.05
Tax 0.018
PAT / Profit After Tax 0.033
Add back Depreciation 1.200
Cashflow -6.2 1.193

Year 0 1
Cash Flow -6.2 1.1925

Answer NPV ₹ -0.1817

IRR 10.93%
 2 3 4 5 ASSET VALUE

1.2 1.2 1.2 1.2 6 Market Value $ 500,000.00

-0.4 -0.4 -0.24 Book Value 0
-0.16 0 0.16 0.24
0.6 1 1 0.6 Profit $ 500,000.00
2.4 4 4 2.4 Tax $ 175,000.00
0.9 1.5 1.5 0.9 $ 325,000.00
1.5 2.5 2.5 1.5 in millions 0.325
1.2 1.2 1.2 1.2
0.3 1.3 1.3 0.3
0 0 0 0
0.3 1.3 1.3 0.3
0.105 0.455 0.455 0.105
0.195 0.845 0.845 0.195
1.200 1.200 1.200 1.200
1.235 2.045 2.205 1.960

2 3 4 5
1.235 2.045 2.205 1.960
SOLUTION

A B C

Answer a

Coupon 7% 9% 11%
Time 12 12 12
Face Value $ 1,000 $ 1,000 $ 1,000 Answer b

Price of a bond today is the

YTD 9% 9% 9% PV of all it's future payments
Coupon Amt 70 90 110
Answer c
Current Yield = Coupon
Amount / Price of Bond
Bond A Bond B Bond C

As Coupon Rate for Bond As Coupon Rate for

< Yield to Maturity, this Bond = Yield to Maturity, As Coupon Rate for Bond >
Bond is trading at this Bond is trading at Yield to Maturity, this Bond is
Discount Par trading at Premium

₹ 856.79 ₹ 1,000.00 ₹ 1,143.21

=-PV(B30,B28,B31,B29) =-PV(C30,C28,C31,C29) =-PV(D30,D28,D31,D29)

8.17% 9.00% 9.62%

=B31/G29 =C31/H29 =D31/I29
SOLUTION Answer a
Sales 15

- Operating Costs 10.5

EBITDA 4.5
-Depreciation 3
EBIT 1.5
-Interest

EBT 1.5
-Tax(40%) 0.6
EAT 0.9
Add back Depreciation 3
Cash Flow for year 1 3.9
Answer b Answer c
EBT 3 EBT

-Tax(40%) 1.2 -Tax(30%)

EAT 1.8 EAT
Add back Depreciation 3 Add back Depreciation
Cash Flow for year 1 4.8 Cash Flow for year 1

If 1.5 million before tax is If Tax rate falls from 405 to

cannibalized then cash flow 30% then cash flow for the
for year 1 increases to 4.8 year increases from 3.9
million from 3.9 million million to 4.05 million
 1.5
Tax is not paid on
0.45 losses
1.05
3
4.05
SOLUTION
D0 $ 16.30 Answer:
Growth -3.50% Price $ 136.78
D1 $ 15.73 The price of the share will be $136.78 today
R 8%
SOLUTION
Machine Press $ 395,000
Parts $ 15,000
Salvage Value $ 45,000
Revenue $ 144,000

Annual Parts inventory $ 2,000

Tax 22%
Discount Rate 11%
Depreciation $ 87,500

CONCLUSION
Yes, the company should invest in the new machine. They are going to have a positive NPV of $2,48,520, with a payback
 Assumed Annual Pre tax Cost Savings PBT
Year 0 1 2
Machine Press $ -395,000
Parts Costs (Treated as Working Capital) $ -15,000 -2000 -2000
PBT $ 144,000 $ 144,000
Tax(22%) $ 31,680 $ 31,680
PAT $ 112,320 $ 112,320
Add back Depreciaiton $ 87,500 $ 87,500

Cashflow $ -410,000 $ 199,820 $ 199,820

Machinery Salvage
Final Cashflows $ -410,000 $ 197,820 $ 197,820
NPV $ 248,520
Payback period 2.0726
IRR 35.81%

e. They are going to have a positive NPV of $2,48,520, with a payback period of 2.0726 years and an IRR of 35.81%
 3 4

-2000 $ 21,000
$ 144,000 $ 144,000
$ 31,680 $ 31,680
$ 112,320 $ 112,320
$ 87,500 $ 87,500

$ 199,820 $ 199,820
$ 45,000
$ 197,820 $ 265,820

35.81%