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    Capital Budgeting - 2021

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    Mohamed Zaitoon
    The document provides financial projections for a proposed capital investment project including sales forecasts, investment costs, income statements, balance sheets, and cash flow statements for the years 2022-2028. It evaluates the project's net present value, internal rate of return, payback period, and weighted average cost of capital to determine if the project should be accepted.

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    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd

    Capital Budgeting - 2021

    Uploaded by

    Mohamed Zaitoon
    35 views7 pages
    The document provides financial projections for a proposed capital investment project including sales forecasts, investment costs, income statements, balance sheets, and cash flow statements for the years 2022-2028. It evaluates the project's net present value, internal rate of return, payback period, and weighted average cost of capital to determine if the project should be accepted.

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    Capital Budgeting - 2021

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    The document provides financial projections for a proposed capital investment project including sales forecasts, investment costs, income statements, balance sheets, and cash flow statements for the years 2022-2028. It evaluates the project's net present value, internal rate of return, payback period, and weighted average cost of capital to determine if the project should be accepted.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    35 views7 pages

    Capital Budgeting - 2021

    Uploaded by

    Mohamed Zaitoon
    The document provides financial projections for a proposed capital investment project including sales forecasts, investment costs, income statements, balance sheets, and cash flow statements for the years 2022-2028. It evaluates the project's net present value, internal rate of return, payback period, and weighted average cost of capital to determine if the project should be accepted.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    of 7

    Capital Budgeting Techniques

    Sales Forecast Schedule LE 2022


    Product A 3,000,000

    Product B 2,000,000

    Product C 5,000,000

    Product D 8,000,000

    Product E 2,000,000

    Total Sales 20,000,000

    Investment
    Fixed Assets Cost
    Land 1,000,000
    Building 3,000,000
    Machinery 5,000,000
    Equipment 1,500,000
    Tools 300,000
    Furniture & Fixtures 120,000
    Vehicles 100,000
    Working Capital 180,000

    Initial Investment 11,200,000

    Income Statement 2020 2022

    Sales 20,000,000
    Less Cost of Goods Sold

    0.3 Raw material 6,000,000


    0.3 Labor cost 6,000,000
    0.1 Overheads 2,000,000
    Cost of Goods Sold 14,000,000

    Gross Profit 6,000,000

    Less Operating Expenses


    0.02 Administrative 120,000
    0.03 Selling Exp (marketing) 180,000
    Total operating expenses 300,000

    Earnings before Depreciation, Interest, Taxes 5,700,000

    0.05 Depreciation 1,476,000

    Earnings before Interest & Taxes (Operating Profit) 4,224,000

    Interest 840,000

    Earnings before Taxes 3,384,000

    0.2 Taxes 676,800


    Net profit 2,707,200

    Cost of Capital Amount LE

    Equity 5,600,000
    Debt 5,600,000

    Investment Cost & Weighted average cost of capital 11,200,000

    Loan Repayment Schedule

    No of years of the loan 1


    Loan Agreeement
    Loan Residual
    6 Interest Payments 840,000
    6 Debt Repayment 933,333
    Total Debt obligation 1,773,333

    Balance Sheet 2021 2022


    Cash & equivalents 180,000 2,229,867
    0.2 Receivables (net) 4,000,000
    0.2 Inventory 2,800,000
    Total Current Assets 180,000 9,029,867
    0.1 Gross Fixed Assets 11,020,000 11,020,000
    Less: Accumulated depreciation 0 1,476,000
    Net fixed assets 11,020,000 9,544,000
    TOTAL ASSETS 11,200,000 18,573,867

    0.2 Accounts Payable 0 2,800,000


    0.2 Accrued Expenses & Others 0 2,800,000
    Total Current Liabilities 0 5,600,000

    Paid-in capital 5,600,000 5,600,000


    0.05 Reserves 0 135,360
    0.95 Retained Earnings 0 2,571,840
    Total Stockholders' Equity 5,600,000 8,307,200
    LT Debt 5,600,000 4,666,667
    TOTAL LIABILITIES & EQUITY 11,200,000 18,573,867
    Cheker 0 0

    Cash Flow Statement 2021 2022

    0.2 EBIT "Operating Profit" X (1-TR) 3,379,200


    Depreciation 1,476,000
    Change in Capital Expenditure 0
    Change in Working Capital 1,020,000

    FCF 5,875,200

    Terminal Value (Salvage Value)

    Initial Investment-Yearly Cash Flow -11,200,000 5,875,200

    -5,324,800
    1 Year
    Pay Back Period 1 Years, 9 Months

    0.160 Net Present Value LE -11,200,000 28,157,490

    1
    0.160 -11,200,000 5,064,828
    NPV 16,957,490

    -793,932
    Discounted Pay Back Period 2 Years, 3 Months

    IRR 54.99%

    PI 2.51

    Accept project if NPV is positive & IRR is higher than cost of capital
    2023 2024 2025 2026 2027 2028
    3,750,000 4,312,500 4,743,750 5,313,000 5,844,300 6,428,730
    0.25 0.15 0.10 0.12 0.1 0.1
    2,300,000 2,530,000 2,732,400 2,896,344 3,012,198 3,072,442
    0.15 0.10 0.08 0.06 0.04 0.02
    5,750,000 6,325,000 6,831,000 7,240,860 7,530,494 7,681,104
    0.15 0.10 0.08 0.06 0.04 0.02
    9,200,000 10,120,000 10,929,600 11,585,376 12,048,791 12,289,767
    0.15 0.10 0.08 0.06 0.04 0.02
    2,260,000 2,938,000 3,966,300 5,552,820 7,773,948 7,773,948
    0.13 0.30 0.35 0.40 0.4 0
    23,260,000 26,225,500 29,203,050 32,588,400 36,209,731 37,245,991

    % Depreciation
    0.00 0
    0.05 150,000
    0.20 1,000,000
    0.20 300,000
    0.05 15,000
    0.05 6,000
    0.05 5,000
    0.00 0

    1,476,000

    2023 2024 2025 2026 2027 2028

    23,260,000 26,225,500 29,203,050 32,588,400 36,209,731 37,245,991

    6,978,000 7,867,650 8,760,915 9,776,520 10,862,919 11,173,797


    6,978,000 7,867,650 8,760,915 9,776,520 10,862,919 11,173,797
    2,326,000 2,622,550 2,920,305 3,258,840 3,620,973 3,724,599
    16,282,000 18,357,850 20,442,135 22,811,880 25,346,812 26,072,194

    6,978,000 7,867,650 8,760,915 9,776,520 10,862,919 11,173,797

    139,560 157,353 175,218 195,530 217,258 223,476


    209,340 236,030 262,827 293,296 325,888 335,214
    348,900 393,383 438,046 488,826 543,146 558,690

    6,629,100 7,474,268 8,322,869 9,287,694 10,319,773 10,615,107

    1,549,800 1,627,290 1,708,655 1,794,087 1,883,792 1,977,981

    5,079,300 5,846,978 6,614,215 7,493,607 8,435,982 8,637,126

    700,000 560,000 420,000 280,000 140,000 0

    4,379,300 5,286,978 6,194,215 7,213,607 8,295,982 8,637,126

    875,860 1,057,396 1,238,843 1,442,721 1,659,196 3,522,666


    3,503,440 4,229,582 4,955,372 5,770,885 6,636,785 5,114,460

    Weight Return/Interest Cost

    0.50 20.00 10.00


    0.50 15.00 6.00

    1.00 16.00

    2 3 4 5 6 7

    4,666,667 3,733,333 2,800,000 1,866,667 933,333


    700,000 560,000 420,000 280,000 140,000 0
    933,333 933,333 933,333 933,333 933,333 0
    1,633,333 1,493,333 1,353,333 1,213,333 1,073,333 0

    2023 2024 2025 2026 2027 2028


    2,480,333 2,685,474 2,885,991 2,695,671 3,890,771 2,047,773
    4,652,000 5,245,100 5,840,610 6,517,680 7,241,946 7,449,198
    3,256,400 3,671,570 4,088,427 4,562,376 5,069,362 5,214,439
    10,388,733 11,602,144 12,815,028 13,775,727 16,202,080 14,711,410
    12,122,000 13,334,200 14,667,620 16,134,382 17,747,820 19,522,602
    3,025,800 4,653,090 6,361,745 7,711,358 9,106,229 10,546,398
    9,096,200 8,681,110 8,305,876 8,423,024 8,641,591 8,976,204
    19,484,933 20,283,254 21,120,904 22,198,750 24,843,671 23,687,615

    3,256,400 3,671,570 4,088,427 4,562,376 5,069,362 5,214,439


    3,256,400 3,671,570 4,088,427 4,562,376 5,069,362 5,214,439
    6,512,800 7,343,140 8,176,854 9,124,752 10,138,725 10,428,877

    5,600,000 5,600,000 5,600,000 5,600,000 5,600,000 5,600,000


    310,532 522,011 769,780 1,058,324 2,800,000 2,800,000
    3,328,268 4,018,103 4,707,603 5,482,341 6,304,946 4,858,737
    9,238,800 10,140,114 11,077,383 12,140,665 14,704,946 13,258,737
    3,733,333 2,800,000 1,866,667 933,333 0 0
    19,484,933 20,283,254 21,120,904 22,198,750 24,843,671 23,687,615
    0 0 0 0 0 0

    2023 2024 2025 2026 2027 2028

    4,063,440 4,677,582 5,291,372 5,994,885 6,748,785 6,909,701


    1,549,800 1,627,290 1,708,655 1,794,087 1,883,792 1,977,981
    -1,102,000 -1,212,200 -1,333,420 -1,466,762 -1,613,438 -1,774,782
    2,675,933 383,071 379,170 12,801 1,412,380 -1,780,823

    7,187,173 5,475,743 6,045,776 6,335,011 8,431,519 5,332,077

    7,180,964

    7,187,173 5,475,743 6,045,776 6,335,011 8,431,519 12,513,041

    8.891
    Months

    16,957,490

    2 3 4 5 6 7
    5,341,241 3,508,077 3,339,028 3,016,181 3,460,652 4,427,483

    3
    2,940,000
    5,600,000
    8,540,000

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