Investment Decision

WePix LTD
Financial Analyst Company: Transformers Bangladesh LTD

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Investment Decisions
Capital Budgeting & Project Management

Submitted to, LubnaRahman
Lecturer Department of Finance Faculty of Business Studies University of Dhaka

Submitted By
Group: 05, Section: B MD WALID-AL-ZUBAYER 14-004 14-064 14-162 ZUBAIRIA KHAN ISHRAT JAHAN SHARMIN ESHRAT JAHAN ESHITA RAFI A 14M. ABDUL KAIUM SHARMIN AKHTAR 14-050 14-058 14-110 14-112 14-114

Group: 01, Section: B ABDUL ASHIF SAJAL SABBIR AHMED

SHARMIN AKTER

14-114

BBA, 14th Batch Department of Finance University of Dhaka Date of Submission: May 15, 2010
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LETTER OF TRANSMITTAL
May 15, 2010 Lubna Rahman Lecturer, Department of Finance University of Dhaka

Subject: Submission of term-paper.

Madam, It is an immense pleasure for us to submit the case analysis on “Investment Decisions”, which is prepared as a partial requirement of the course named “Capital Budgeting & Project Management (F-303) of BBA program under Department of Finance of Faculty of Business Studies, University of Dhaka. This study has given us the opportunity to think and work practically about the real world investment scenario as well as itsall relevant factors. Moreover, this study provided us the privilege to know about effect on financial status, cash flow and possible options. The experiences that we have gathered through this study will help us in our career, indeed. We would like to convey our special thanks and gratitude to you for patronizing our effort & for giving us proper guidance and valuable advice. We have put our best effort to ensure the authenticity of the report. We earnestly request you to call us if you think any further work should be done on the topic that you have chosen for us. Thanking you Group: 1 & Group: 5 14th Batch, Section: B Department of Finance University of Dhaka

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Table of Contents
Chapters Chapter I Topics Preliminary Portion
1.1 1.2 1.3 1.4 Company Profile of Transformers Bangladesh Proposal of WePix Inc. Principles to be followed Financial Status of WePix Inc.

Pg No
5 8 12 12 13 14 16 19 22

Chapter II

Investment Appraisals
2.1Projects at a glance 2.2 Interpretation of Calculation 2.3 Sensitivity Analysis 2.4 Decision Making

Appendix

Calculation in Details

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Chapter 01 Preliminary Portion

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1st
Financial Analyst Firm

TRANSFORMERS BANGLADESH, with the slogan of Transforming Bangladesh
intends to make the history in the financial sector. The first financial analyst firm of Bangladesh is the one which is to make the magical move with an intention to offer the most accuracy and transparency in analyzing data. All types of relevant data are analyzed by considering possible dimensions and experiments. We are to provide the supreme service to the business-oriented class. As financial analyst, we make efforts on researches of macro- economic and micro- economic conditions along with company fundamentals to make business, sector and industry recommendations. Transformers Bangladesh also often recommends a course of action, such as to buy or sell a company's stock based upon its overall current and predicted strength. We are to be aware of current developments in the field in which he or she specializes as well as in preparing financial models to predict future economic conditions for any number of variables.

Our MissionTowards.. We as a financial analyst firm providing advisory services, energize every aspect of the financing for the benefit of our clients to put forward effective task schedule that are driven by intelligent investment and grounded on persuasive insights of the targeted clients. Irrespective of the nature of service or industry, we believe that all campaigns require the same considerations of risk- return and relevant positioning of profitability, regardless of the category in which it compete.

Anti- decepticon Strategy.. We also toil to fully comprehend our client's dynamic and at times, even the latent requirements, and those of their stakeholders and shareholders, so that can unearth new ways to ensure financial sustainability of all parties. In case there isn't a ready investment solution to our clients' problems, we take to the task responsibly and execute all relevant prime functions exclusively for their ease and benefit.

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Our Promise to the Generation We begin our journey towards developing a multi- dimensional financial analyst firm with a goal to offer all possible aspects of investment opportunities along with the forecasted future scenario. Our key responsibilities are reflected as follows:

We are committed to conduct extensive research and analysis of the investment portfolios of individuals or companies. Based on this analysis, we prepare a report that provides solutions or ideas to our potential clients to enhance or diversify the portfolio. We tend to provide the key investment decisions with rational alternatives tied with the possible solutions based upon the research data. We are well-oriented about the financial set-up and procedures along with a good understanding of the terms and conditions of the statistics and economics. Our job also involves closely monitoring the finances of the individual or company which includes analyzing account statements (Income statement, Balance Sheet, Cash flow statement, Fund flow statement). We keep a track of the changing economic trends in the country as well as at the global level and make changes in the investment strategies with a requirement of preparing reports on the prospective investment avenues. We are to be in constant touch with the company management and discuss the major points or any concerns with respect to any critical investment modifications. Transformers Bangladesh specializes in different sectors like manufacturing, retail, infrastructure, energy and banking and financial services. Apart from these tasks, the other duties include working on complex financial models, working on presentations for clients as well as for major conferences, analyzing the legal
documents of client companies, regularly research the market trends and compile data.

The mentioned are the example of the package benefit provided to our clients. The highly professional Transformers Bangladesh has super active functional wings that make flying easy for the potential business oriented class by offering multi- purpose financial assistance.

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Getting Started… Transformers Bangladesh started the journey through launching its corporate gestures. Its image- building introductory presence is a bang in the limited world of financial markets and institutions in Bangladesh. As the very first assignment, Transformers got the responsibility to work on the investment appraisal of the renowned manufacturing company of the country called WePix Inc.

Receiving Proposal from WePix

Quantitative Analysis

Consideration of Relevant Facts

Discussion about Principals and Guidelines

Defining the Strategic Planning

Interpretation of Analysis

Evaluating the Present Status of WePix

Investment Appraisal of WePix

Final Decision Making

At first three stages Transformers made preliminary testing that whether it will be beneficial to take the responsibility of the assignment proposed by Wepix. After the completion of third stage Transformers decides to go for the contract with WePix that Transformers would evaluate the projects of WePix considering all possible relevant factors. We, Transformers Bangladesh tried our best to give 100% effort in executing the evaluation activities through strategic planning and quantitative analysis. Last three are the decision making stage where critical reasoning and feasibility facts were the main concern.

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Proposal of WePixInc. On May 10, 2010 WePix Inc. made a formal approach through proper channel with a proposal of project evaluat ion. Their proposal included very short descript ion of the projects. To consider the proposal t he following two stages were followed.

Principles & Guidelines

These are the principles and guidelines of capital budgeting on which we set our focus to complete the whole procedure in a disciplined way.      Cash flow Principle After- tax Principle Incremental Principle Inflation Adjustment Principle Stand- alone Principle

Rationale for the consideration We give here the short description regarding the fact that why we are to follow the principles. The rationale for adopting these and implementing these are shown in this portion.  Principle 1: The cash flow principle

In this project analysis our main concern is the cash flow, not the profit. Because, 1. Profits are susceptible to accounting tricks such as depreciation, amortization, stock valuation, splits between capital and revenue etc which leads to profit of different amounts by different accountant. 2. We spend cash, not profits. Whether we arrive at cash flows from the Profit and Loss Account or Projected Cash Flow Statement is our choice.

3. Economic value of a proposed investment can be ascertained by use of cash flows. 4. Cash flows approach takes into account the time value of money which reveals the real situation in a true sense.

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Direct Method We decide to go with the direct method which arrives at cash flows by knocking out cash paid during the year from the cash received during the year. It refers to the Projected Cash Flow Statement. Principle 2: The After-tax principle

The Cash flows must be expressed after tax. The logic is unexceptional. Tax is an outflow and should therefore be recognized as such.

 Principle 3: The Incremental principle In such case, to sort out the enigma carefully we are to define few rules under this principle suggested by the experts. Rules to be followed:  Including the opportunity cost Opportunity cost requires us to give up a benefit. Like all cash flows the opportunity cost too should be computed on after tax basis since the gain foregone is the after tax gain.  Forgetting the sunk cost Sunk costs refer to costs incurred in the past and which are not recoverable. Such a cost may have already been paid or the liability to pay may already have been incurred.  Average could be wrong We are to beware of the erroneous results of average. As a statistician once pointed, “If a person puts one foot on a hot oven and another in ice cold water, on an average he is comfortable”!  Considering side- effects When an investment is undertaken, it might affect other projects. This is what marketing buffs call product cannibalization; a situation where a company’s product eats into another of the company’s products. Side effects can also be positive. When a project makes a loss, the loss can be adjusted against profits of other projects. The loss goes to reduce the taxable income and hence the tax liability of the firm. This is a positive side effect. Identifying side effects is crucial to investment decision-making.  Including working capital Capital investments call for working capital investments. These are outflows of money and should be considered as such. When the project is closed the working capital investment will be recovered. This recapture of working capital is an inflow and should be considered as such.

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Principle 4: The Inflation Adjustment principle Prices don’t stay stagnant; they change. If there is one thing that defies the law of gravity it is prices! So when we make estimate of future cash flows should we consider inflation or not? We could either consider inflation or ignore it; whatever we do, we must do it consistently. Here we decide cash flows to include inflation, thus the discount rate is adjusted to include inflation and it is the Inflation Adjusted Discount Rate of Return.

Principle 5: The Stand- alone principle Conventional financial wisdom says to segregate the investment decision from the financing decision. What this means is that we must study a project’s viability on a standalone basis – unmindful of how it is funded. This is also called the long-term fund principle. Once the project is found viable, then we should proceed to identify sources of finance. The mentioned are the principals followed according to the capital budgeting. All other necessary guidelines and principals are to be followed by Transformers Bangladesh.

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Ratio Analysis of WePix Inc. Ratio analysis is the starting point in developing the information desired by Transformers Bangladesh. It provides only a single snapshot, the analysis being for one given point or period in time thus it is possible to define the company ratio with a standard one.Here we have analyzed some of the ratios which reflect the situation of WePix Inc. before taking the evaluating the investment appraisals.

Before the Investment Appraisal
Ratios Current ratio FORMULA Current assets/current liabilities YEARS 2009 2008 1.20times 1.14times ANALYSIS In 2008 the ratio is only 1.14 times and in the 2009 increases to 1.20 times. In 2009 the current assets and current liabilities are decreasing than the 2008. The quick ratio has increase over the year 2009 than 2008. This has happened because inventory has decreased about 1.02 times in 2009 and we know that inventory is deducted from current asset while calculating quick ratio. For the same revenue in this case also the ratio has decreased because the increasing rate of total equity 1.11 is higher than the increasing rate of return of net income 1.01. Earning per share of WePix is increasing day by day. In 2008 it was 9 Tk and in the 2009it has increased to 9.08. It’s a good sign for company reputation and investors will be interested to invest on this company. In debt ratio is no change between 2008and 2009. The ratio is only 30%. And the only 30% of total assets is financed by the creditor. It’s good sign at creditor points of view.

LIQUIDITY RATIO

Quick ratio

(Current assets Inventory) / Current Liabilities

.43times

0.42times

PROFITABILITY RATIO

Return common equity

on stock

Net income / Common stockholders equity

10%

11%

Price ratio

earning

Market price of stock / Earning per share

22%

39%

DEBT COVERAGE RATIO

Debt to assets

total

Debt to total asset =Total debt / Total Asset

30%

30%

Last 2 years growth at a glance (in thousand) Particulars 2009 2008 Turnover (Net) 2,401,241 2,452,524 Net profit 401,780 398295 Earning per share 9.08 9.00

Amount (51,283) 3,485 0.08

Growth % (2.09)% .87% .89%
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Chapter 02 Investment Appraisals

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Projects at a Glance To invest a firm’s capital to a right place “Capital Budgeting and Resource Allocation” is a simple process viewed in a perfect mechanical terms. Capital budgeting analyst can eliminate a number of issues that hinder to choose a best investment through “Quantitative analysis” Evaluation Basis Basics Number of project 8 projects Ranking for acceptance 4 projects

For Catalysts Decision Making

Judgment Basis Special Characteristics

Quantitative consideration

Mutually Exclusiveness Project 7 and 8 between projects Initial investment( Applicable all $2 million projects) Measurement of Risk Level Equal for all projects Cost of capital 10%

As per given data, there are 8 projects under consideration of the company. Among them project 1 gets return as even amount of cash flows until year 7 whereas returns for project 5 fully are even series of cash flows from year 1 through 15. The remaining projects have uneven series of cash flows with different time periods. Strategic Planning With the discussion of WePix, few important factors are settled. These have strong relevance with the future of the investment appraisal.         According to WePix, the NPV of the selected projects need to be more than $ 1, 200, 000. Investment appraisals having less payback period are preferred as these will be more profitable. WePix considers the discounted payback period with much importance. In case of any conflict among the results, the NPV of the projects are to be set as the prime basis. Thus, final decision to be made on the result of the NPV. Though all the appraisals are in the same risk class, we consider this fact in a minimal level. We consider the uprising inflationary effect thus IARRR is settled as 10.79%. In case of Sensitivity Analysis, with WePix we define the bound as 5% of the sales of the base case. By examining all other facts we discover that 5% increase or decrease in sales makes 10% increase or decrease in Cash Benefit.

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Risk Analysis Risk in capital budgeting is the possibility of occurrence of a predicted variable when the certainty of occurrence of an event is not known. All the eight projects are based on assumptions that have similar certain associated risks. Considering recent situations we identify few factors which may cause the risk to fluctuate. We raise the questions that what will happen,   If there is an Exchange Rate Risk or Political Risk? If there is a tax law differences or transfer pricing?

In order to make the fluctuation of risk smooth we adopt a measure which will show us the possible cash flow of the projects. A. Risk Index

0.4
0.2 0.0

In the Risk Index we assign 0.2 for all the eight projects. We predict that risk will rise up to 0.4 in next 15 years on average.

(Risk- free)

B. RADR In this stage calculation of RADA is not done. The reason behind this is there is strong possibility in fiscal policies which are to change the risk level dramatically. Thus with the consent of WePix it is decided that the RADR to be determined in the very near future.

Rationale for RADA There exists “Opportunity Costs” which costs are directly proportionate to risk.The RADA is therefore the premium expected over the risk free return.

Factor we Consider We assume that risks vary with projects through the time period. Consider ation of the Average Risk Adjusted Discount Rate is much importnant.

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Inflation Analysis It is inflation which we need to consider with possible caution and care. Because of Inflation the value of cash flow changes radically. For an approximate appropriation we make the effort to work with the Inflation Adjusted Required Rate of Return. Here we predict the inflation on average 0.00714 through Fifteen years for all eight projects. In the equation of Fisher Effect we apply this rate to calculate the Nominal Rate which we call here as IARRR. The rate is calculated as 10.79%. The Fisher Effect defines the relationship between real rates, nominal rates and inflation.
• (1 + R) = (1 + r) (1 + h) Here R = nominal rate r = real rate h = expected inflation rate

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Investment Appraisals at a Glance We attempt to evaluate the eight investment appraisals considering four methods; NPV, IRR, Payback Period, Discounted payback Period. The result is shown in tabular format here. (’000) PROJECTS 1 1,310 NPV ($) 11% IRR 6.06 PBP* DPBP* 8 2 165 6% 2 NA 3 8,000 11% 14.20 14.93 4 1,561 12% 6.05 9.43 5 2,200 11% 7.14 14.98 6 200 10% 0.91 NA 7 560 15% 1.89 2.02 8 2,150 11% 6.04 6.96

*PBP= Payback Period *DPBP= Discounted Payback Period INTERPRETATION  NPV If we consider the fact of required NPV as greater than $ 1, 200, 000; the acceptable investment appraisals would be 1.00, 3.00, 4.00, 5.00 and 8.00. To make the best choice, we can go for the later four appraisals.  IRR In case of IRR it is needed that IRR > Cost of Capital. Investment Appraisals of 1.00, 3.00, 4.00, 5.00, 7.00, and 8.00 are the ones to be considered here. Moreover, 7.00 and 8.00 are mutually exclusive thus the greater one to be more preferable than the other. 7.00 and 4.00 can be easily acceptable. Conflicts arise among 1.00, 3.00 and 5.00 all having same IRR.  Payback Period The appraisal having less payback period are preferable. The top ones are in this case: 2.00, 6.00, 7.00 and 8.00. Again as both 7.00 and 8.00 cannot be chosen, we may choose 7.00 as it has the second least payback period. We can take 3.00 instead of 8.00. The acceptable ones are 2.00, 3.00, 6.00 and 7.00. Discounted Payback Period Here two investment appraisals 2.00 and 6.00 show negative amounts after discounting the payback period. Thus these two are out of the scene. Among the others 7.00, 8.00, 1.00 and 4.00 can be in consideration. But as 7.00 and 8.00 are mutually exclusive, we can choose 7.00 providing better result in case of payback period.

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Graphical Overview
18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 1 2 3 4 5 6 7 8 IRR Payback Period

Figure 1: Relationship between IRR & Payback Period

16.00 14.00 12.00 10.00 Timeline 8.00

16.00 14.00 12.00 10.00 8.00

Discounted Payback Period 6.00
4.00 2.00 0.00 1 2 3 4 5 6 7 8

6.00
4.00 2.00 0.00

Payback Period

Projects

Figure 2: Simultaneous presentation of Discounted Payback Period & Payback Period

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NPV
$8,000.00 $7,000.00 $6,000.00 $5,000.00 $4,000.00 $3,000.00 $2,000.00 $1,000.00 $0.00 1 2 3 4 5 6 7 8 NPV

Figure 3: NPV Scenario

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Sensitivity Analysis The Investment Appraisals of WePix are to be tested through Sensitivity Analysis to get the scenario where forecasted risk is especially severe. The main focus of these eight is to maximize the sales to benefit the company. Thus, we freeze all of our variables except sales to check how sensitive the estimate of NPV is to changes in sales. To make the calculation easier we choose 5 most considerable appraisals from the perspective of NPV: 1.00, 3.00, 4.00, 5.00 and 8.00. With the discussion with WePix we define the bound as 5% of the sales of the base case. Moreover, we discover that 5% change in sales influence 10% cash benefit. Considering the Inflation Adjusted Discount Rate as 10.79% here we show the Best Case & Worst Case scenario on the basis of Base Case.

Base Case
1.00 3,310.00 2.00 2,165.00 3.00 10000.00 $8000.00 4.00 3,561.00 $2,147.45 5.00 4,200.00 6.00 2,200.00 7.00 2,560.00 8.00 4,150.00

Cash benefit NPV

$2,006.18 $1,897.19

$2,037.00 $1,985.74 $2,138.64 $2,078.10

Worst Case
1.00 Cash benefit NPV 2.00 3.00 4.00 5.00 6.00 7.00 8.00

$ $ $ $ $ $ $ $ 2,979.00 1,948.50 9,000.00 2,804.90 3,780.00 1,980.00 2,304.00 3,653.00 $1,805.56 $1,707.47 $1,935.24 $1,846.70 $1,833.30 $1,787.16 $1,924.78 $1,797.33

Best Case
Cash benefit NPV 1.00 3641 2.00 2381.5 3.00 0 4.00 4317.1 5.00 4620 6.00 2420 7.00 2816 8.00 4647

$2,206.80 $2,086.91 $8021.00

$2,448.21 $2,240.70 $2,184.31 $2,352.51 $2,358.86

We have done sensitivity analysis to be sure about that we are on the right path of investment appraisals towards the decision making about selecting the four projects.

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Worst Case: Cash Benefit & NPV
$9,000.00 $8,000.00 $7,000.00 $6,000.00 $5,000.00 $4,000.00 $3,000.00 $2,000.00 $1,000.00 $1 2 3 4 5 6 7 8

Cash benefit NPV

Base Case: Cash Benefit & NPV
10,000.00 9,000.00 8,000.00 7,000.00 6,000.00 5,000.00 4,000.00 3,000.00 2,000.00 1,000.00 0.00
1 2 3 4 5 6 7 8

Cash benefit NPV

Best Case: Cash Benefit & NPV
90000 80000 70000 60000 50000 40000 30000 20000 10000 0

Cash Benefit NPV

1

2

3

4

5

6

7

8

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Final Decision Making Transformers Bangladesh finds out few important factors in the final stage of decision making procedure:

Base NPV IRR Payback Discounted Payback Sensitivity Analysis 

Acceptable Projects 1, 3, 4, 5and 8 1, 3, 4, 5 and 7 2, 6 and 7 1, 4, 7 and 8 1, 3, 4 and 8

At the preliminary stage if we take the appropriate decision according to the result of NPV our choice would be 3.00, 4.00, 5.00 and 8.00. To avoid the conflict and confusion it is best to go with the best performance basis decision. Here among the eight projects, we should suggest to take the best four 1.00, 3.00, 4.00 and 8.00.

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Appendix

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PROJECT NUMBER Initial Investment Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Sum of Cash flow benefits Excess of cash flow over initial investment IRR Cost of Capital Payback Period NPV IADRRR ( R )

1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 (2,000.00) (2,000.00) (2,000.00) (2,000.00) (2,000.00) (2,000.00) (2,000.00) (2,000.00) 330.00 1,666.00 0.00 160.00 280.00 2,200.00 1,200.00 (350.00) 330.00 334.00 0.00 200.00 280.00 0.00 900.00 (60.00) 330.00 165.00 0.00 350.00 280.00 0.00 300.00 60.00 330.00 0.00 0.00 395.00 280.00 0.00 90.00 350.00 330.00 0.00 0.00 432.00 280.00 0.00 70.00 700.00 330.00 0.00 0.00 440.00 280.00 0.00 0.00 1,200.00 330.00 0.00 0.00 442.00 280.00 0.00 0.00 2,250.00 1,000.00 0.00 0.00 444.00 280.00 0.00 0.00 0.00 0.00 0.00 0.00 446.00 280.00 0.00 0.00 0.00 0.00 0.00 0.00 448.00 280.00 0.00 0.00 0.00 0.00 0.00 0.00 450.00 280.00 0.00 0.00 0.00 0.00 0.00 0.00 451.00 280.00 0.00 0.00 0.00 0.00 0.00 0.00 451.00 280.00 0.00 0.00 0.00 0.00 0.00 0.00 452.00 280.00 0.00 0.00 0.00 0.00 0.00 10,000.00 (2,000.00) 280.00 0.00 0.00 0.00 3,310.00 2,165.00 10,000.00 3,561.00 4,200.00 2,200.00 2,560.00 4,150.00 1,310.00 165.00 8,000.00 1,561.00 2,200.00 200.00 560.00 150.00 0.11 0.10 6.06 1,310.00 10.79% 0.06 0.10 2.00 165.00 0.11 0.10 14.20 8,000.00 0.12 0.10 6.05 1,561.00 0.11 0.10 7.14 2,200.00 0.10 0.10 0.91 200.00 0.15 0.10 1.89 560.00 0.11 0.10 6.04 2,150.00

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Worst Case Worst Case Worst Case Worst Case Worst Case Worst Case Worst Case Worst Case Worst Case Worst Case Worst Case Worst Case Worst Case Worst Case Worst Case

PROJECT NUMBER Year 1 Year Year Year Year Year Year Year Year Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 2 3 4 5 6 7 8 9

1.00 $ 297.00 $ 297.00 $ 297.00 $ 297.00 $ 297.00 $ 297.00 $ 297.00 $ 900.00 $ $ $ $ $ $ $ -

2.00 $ 1,499.40 $ 300.60 $ 148.50 $ $ $ $ $ $ $ $ $ $ $ $ -

3.00 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 9,000.00

4.00 $ 144.00 $ 180.00 $ 315.00 $ 355.50 $ 388.80 $ 396.00 $ 397.80 $ 399.60 $ 401.40 $ 403.20 $ 405.00 $ 405.90 $ 405.90 $ 406.80 $ (2,200.00)

5.00 $ 252.00 $ 252.00 $ 252.00 $ 252.00 $ 252.00 $ 252.00 $ 252.00 $ 252.00 $ 252.00 $ 252.00 $ 252.00 $ 252.00 $ 252.00 $ 252.00 $ 252.00

6.00 $ 1,980.00 $ $ $ $ $ $ $ $ $ $ $ $ $ $ -

7.00 $ 1,080.00 $ 810.00 $ 270.00 $ 81.00 $ 63.00 $ $ $ $ $ $ $ $ $ $ -

8.00 $ (385.00) $ (66.00) $ 54.00 $ 315.00 $ 630.00 $ 1,080.00 $ 2,025.00 $ $ $ $ $ $ $ $ Page | 1

Worst Case Worst Case

Cash benefit NPV

$ $ $ $ $ $ $ $ 2,979.00 1,948.50 9,000.00 2,804.90 3,780.00 1,980.00 2,304.00 3,653.00 $1,805.56 $1,707.47 $1,935.24 $1,846.70 $1,833.30 $1,787.16 $1,924.78 $1,797.33

Best Case Best Case Best Case Best Case Best Case Best Case Best Case Best Case Best Case Best Case Best Case Best Case

PROJECT NUMBER Year 1 Year Year Year Year Year Year Year Year Year 10 Year 11 Year 12 2 3 4 5 6 7 8 9

1.00 363 363 363 363 363 363 363 1100 0 0 0 0

2.00 1832.6 367.4 181.5 0 0 0 0 0 0 0 0 0

3.00 0 0 0 0 0 0 0 0 0 0 0 0

4.00 176 220 385 434.5 475.2 484 486.2 488.4 490.6 492.8 495 496.1

5.00 308 308 308 308 308 308 308 308 308 308 308 308

6.00 2420 0 0 0 0 0 0 0 0 0 0 0

7.00 1320 990 330 99 77 0 0 0 0 0 0 0

8.00 -315 -54 66 385 770 1320 2475 0 0 0 0 0

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Best Case Best Case Best Case

Year 13 Year 14 Year 15 Cash benefit NPV

0 0 0 3641

0 0 0 2381.5 11,000

0 0

496.1 497.2 -1800 4317.1

308 308 308 4620

0 0 0 2420

0 0 0 2816

0 0 0 4647

11,000

$2,206.80 $2,086.91

$2,448.21 $2,240.70 $2,184.31 $2,352.51 $2,358.86

PROJECT NUMBER Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year

1.00 330.00 330.00 330.00 330.00 330.00 330.00 330.00 1,000.00 0.00 0.00 0.00 0.00 0.00 0.00

2.00 1,666.00 334.00 165.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

3.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

4.00 160.00 200.00 350.00 395.00 432.00 440.00 442.00 444.00 446.00 448.00 450.00 451.00 451.00 452.00

5.00 280.00 280.00 280.00 280.00 280.00 280.00 280.00 280.00 280.00 280.00 280.00 280.00 280.00 280.00

6.00 2,200.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

7.00 1,200.00 900.00 300.00 90.00 70.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

8.00 (350.00) (60.00) 60.00 350.00 700.00 1,200.00 2,250.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Page | 3

14 Year 15 Cash benefit NPV

0.00 3,310.00 $2,006.18

0.00 10, 000 2,165.00 10, 000 $1,897.19 $0.00

(2,000.00) 3,561.00 $2,147.45

280.00 4,200.00 $2,037.00

0.00 2,200.00 $1,985.74

0.00 2,560.00 $2,138.64

0.00 4,150.00 $2,078.10

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