25742/25799 Financial Management

Case Study Autumn 2022

Prestige Smash Repairs

Tax rate = 30%

Discount rate = 10%

Year 0 Year 1 Year 2 Year 3 Year 4

Cash Flows at the start
training staff - 35,000
tax effect 35,000
Building - 256,000
Car Park Construction - 74,000
Spray Booth - 348,000
opportunity cost - 236,000
inventory - 23,000
contingency -16500
old tools and equipment 15,000

Free Cash Flow - 938,500

Cash Flows over the life
Revenue
Historic Cars 570,000 645,000 720,000 750,000
Insurance 78,000 150,000 200,000 250,000
Total Revenue 648,000 795,000 920,000 1,000,000
Costs
Materials Historic Cars - 114,000 - 129,000 - 144,000 - 150,000
Materials Insurance - 35,100 - 67,500 - 90,000 - 112,500
Building Maintenance - 6,000 - 7,500 - 15,000 - 20,000
General Consumables - 64,800 - 79,500 - 92,000 - 100,000
Wages - 202,000 - 267,400 - 336,616 - 344,254
Total Costs - 421,900 - 550,900 - 677,616 - 726,754
Other Relevant Cash Flows
maintaines 17,000 17,510 - -
EBITDA 243,100 261,610 242,384 273,246
Depreciation
Building - 20,480 - 20,480 - 20,480 - 20,480
Car Park - 5,920 - 5,920 - 5,920 - 5,920
Spray Booth - 69,600 - 69,600 - 69,600 - 69,600
EBIT 147,100 165,610 146,384 177,246
Tax - 44,130 - 49,683 - 43,915 - 53,174
NOPAT 102,970 115,927 102,469 124,072
Depreciation
Building 20,480 20,480 20,480 20,480
Car Park 5,920 5,920 5,920 5,920
Spray Booth 69,600 69,600 69,600 69,600
Operating Cash Flow 198,970 211,927 198,469 220,072

Free Cash Flow - 938,500 198,970 211,927 198,469 220,072

Cash Flows at the end

Revenue
Historic Cars
Insurance
Total Revenue
Costs
Materials Historic Cars
Materials Insurance
Building Maintenance
General Consumables
Wages
Total Costs
Other Relevant Cash Flows
Savings
EBITDA
Depreciation
Building
Car Park
Spray Booth
EBIT
Tax
NOPAT
Depreciation
Building
Car Park
Spray Booth
Operating Cash Flow

Capital Expenditure
Building
Car Park
Spray Booth
Terminal Value
resale of land
inventory
total

Free Cash Flow - 938,500 198,970 211,927 198,469 220,072

NPV 213,078
213,078
Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

772,500 795,675 819,545 844,132 869,456

257,500 265,225 273,182 281,377 289,819
1,030,000 1,060,900 1,092,727 1,125,509 1,159,274

- 154,500 - 159,135 - 163,909 - 168,826 - 173,891

- 115,875 - 119,351 - 122,932 - 126,620 - 130,418
- 20,600 - 21,218 - 21,855 - 22,510 - 23,185
- 103,000 - 106,090 - 109,273 - 112,551 - 115,927
- 362,686 - 373,566 - 384,773 - 396,316 - 408,206
- 756,661 - 779,360 - 802,741 - 826,824 - 851,628

- - - - -
273,339 281,540 289,986 298,685 307,646

- 20,480 - 20,480 - 20,480 - 20,480 - 20,480

- 5,920 - 5,920 - 5,920 - 5,920 - 5,920
- 69,600
177,339 255,140 263,586 272,285 281,246
- 53,202 - 76,542 - 79,076 - 81,686 - 84,374
124,138 178,598 184,510 190,600 196,872

20,480 20,480 20,480 20,480 20,480

 5,920 5,920 5,920 5,920 5,920
69,600
220,138 204,998 210,910 217,000 223,272

220,138 204,998 210,910 217,000 223,272

895,539
298,513
1,194,052

- 179,108
- 134,331
- 23,881
- 119,405
- 420,452
- 877,177

-
316,875

- 20,480
- 5,920

290,475
- 87,143
203,333

20,480
5,920
-
229,733

15,360
4,440
12,600
32,400
355,000
23,000
 607,733

220,138 204,998 210,910 217,000 223,272 607,733