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    Session4 and Mini Cases

    Uploaded by

    Vibhuti Anand
    The document contains cash flow information for a new project over 3 years. In year 1, the cash flow is -60 with an IRR of 25%. In years 2 and 3, the cash flows are 155 and -100 respectively. An NPV profile is also provided showing the NPV at different discount rates ranging from 5% to 45%. The IRR is calculated to be 25% and 33.33%.

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

    Session4 and Mini Cases

    Uploaded by

    Vibhuti Anand
    25 views18 pages
    The document contains cash flow information for a new project over 3 years. In year 1, the cash flow is -60 with an IRR of 25%. In years 2 and 3, the cash flows are 155 and -100 respectively. An NPV profile is also provided showing the NPV at different discount rates ranging from 5% to 45%. The IRR is calculated to be 25% and 33.33%.

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    Session4 and mini cases

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    © © All Rights Reserved

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    The document contains cash flow information for a new project over 3 years. In year 1, the cash flow is -60 with an IRR of 25%. In years 2 and 3, the cash flows are 155 and -100 respectively. An NPV profile is also provided showing the NPV at different discount rates ranging from 5% to 45%. The IRR is calculated to be 25% and 33.33%.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    25 views18 pages

    Session4 and Mini Cases

    Uploaded by

    Vibhuti Anand
    The document contains cash flow information for a new project over 3 years. In year 1, the cash flow is -60 with an IRR of 25%. In years 2 and 3, the cash flows are 155 and -100 respectively. An NPV profile is also provided showing the NPV at different discount rates ranging from 5% to 45%. The IRR is calculated to be 25% and 33.33%.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 18

    year CF IRR

    1 -60 25.00%
    2 155
    3 -100

    NPV profile
    disc rate NPV ₹0.50
    5% ₹ -2.94
    10% ₹ -1.58 ₹0.00
    15% ₹ -0.72 0% 5% 10%
    20% ₹ -0.23
    ( ₹0.50)
    23% ₹ -0.07
    25% ₹ 0.00
    30% ₹ 0.05 ( ₹1.00)
    34% ₹ -0.01
    35% ₹ -0.04 ( ₹1.50)
    40% ₹ -0.22
    45% ₹ -0.46
    ( ₹2.00)

    IRR1 IRR2
    25.00% 33.33% ( ₹2.50)

    ( ₹3.00)

    ( ₹3.50)
    Chart Title
    0

    0
    0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

    0)

    0)

    0)

    0)

    0)

    0)

    0)
    45% 50%
    year cost sales operating margin CF
    0 150000 -150000
    1 60000 1000000 100000 40000
    2 60000 1000000 100000 40000
    3 60000 1000000 100000 40000
    4 60000 1000000 100000 40000
    5 60000 1000000 100000 40000
    6 60000 1000000 100000 40000
    7 60000 1000000 100000 40000
    8 60000 1000000 100000 40000
    9 60000 1000000 100000 40000
    10 60000 1000000 100000 40000

    NPV= ₹ 76,008.92
    year cost value of shop sales opex tax
    0 50000
    1 15000 7500 3000
    2 15750 7875 3150
    3 16537.5 8268.75 3307.5
    4 17364.375 8682.1875 3472.875
    5 10000 18232.59375 9116.296875 3646.51875

    1 2 3 4 5
    ATCF 7700 7925 8161.25 8409.31 8669.78
    PV ₹ 6,875.00 ₹ 6,317.76 ₹ 5,809.02 ₹ 5,344.27 ₹ 4,919.47

    NPV -50000 ₹ 29,265.51 ₹ 5,674.27


    NPV= -15060.2189

    PV of additonal sales
    year additional sales pre tax op margin after tax op margin
    0
    1 20000 8000 4800
    2 22000 8800 5280
    3 24200 9680 5808
    4 26620 10648 6388.8
    5 29282 11712.8 7027.68
    NPV= ₹ 20,676.81

    net effect= ₹ 5,616.59


    profit additional book sales operating margin tax profit

    4500 20000 8000 3200 8800


    4725 22000 8800 3520 9680
    4961.25 24200 9680 3872 10648
    5209.3125 26620 10648 4259.2 11712.8
    5469.77813 29282 11712.8 4685.12 12884.08

    NPV
    assuming disc rate 10%

    Total

    ₹ 29,265.51 ₹ 29,265.51
    CF of coffee shop only total CF
    -50000 -50000
    4500 13300
    4725 14405
    4961.25 15609.25
    5209.3125 16922.1125
    15469.778125 28353.858125

    ₹ -25,113.13 ₹ 14,886.87

    YES OPEN THE COFFEE SHOP


    year cost 1 cost 2 cost 3
    0 -12000 -5000 -3500
    1 -500 -1000 -1200
    2 -500 -1000 -1200
    3 -500 -1000 -1200
    4 -500 -1000 -1200
    5 -500 -1000 -1200
    6 -500 -1000 -1200
    7 -500 -1000 -1200
    8 -500 -1000 -1200
    9 -500 -1000 -1200
    10 -500 -1000 -1200
    11 -500 -1000 -1200
    12 -500 -1000 -1200
    13 -500 -1000 -1200
    14 -500 -1000 -1200
    15 -500 -1000 -1200
    16 -500 -1000
    17 -500 -1000
    18 -500 -1000
    19 -500 -1000
    20 -500 -1000
    INFINITE

    -17000 ₹ -13,513.56 ₹ -12,627.30

    -1700 ₹ -1,587.30 ₹ -1,660.16


    market size 100000000 year cost
    market share 10% 10000000 0 -10000000
    fixed cost per year 2000000 1 -1000000
    Var cost 40% of revenues 2 -1000000
    tax rate 40% 3 -1000000
    new mkt share 20% 20000000 4 -1000000
    investment 10000000 5 -1000000
    lifetime 10 yrs 6 -1000000
    advertising expense 1000000 per year 7 -1000000
    8 -1000000
    9 -1000000
    10 -1000000

    initial investment 11000000

    incremental revenue 10000000


    var cost 4000000
    advt cost 1000000
    depreciation 1000000
    taxable income 4000000
    taxes 1600000
    after tax income 2400000
    add back depreciation 1000000
    after tax CF 3400000

    initial investment 11000000


    annual CF 3400000
    PV of annual CF ₹ 22,814,276.76
    Working capital 1000000
    PV of working capital ₹ 463,193.49
    NPV ₹ 12,277,470.24
    revenue fixed costs var cost income taxes net income (or) CF
    -10000000
    20000000 2000000 8000000 10000000 4000000 6000000
    20000000 2000000 8000000 10000000 4000000 6000000
    20000000 2000000 8000000 10000000 4000000 6000000
    20000000 2000000 8000000 10000000 4000000 6000000
    20000000 2000000 8000000 10000000 4000000 6000000
    20000000 2000000 8000000 10000000 4000000 6000000
    20000000 2000000 8000000 10000000 4000000 6000000
    20000000 2000000 8000000 10000000 4000000 6000000
    20000000 2000000 8000000 10000000 4000000 6000000
    20000000 2000000 8000000 10000000 4000000 6000000
    c. Van
    1800
    ₹ 6,823.42

    d. atcf
    initial investment 500000

    revenue 400000
    op cost 160000
    Depreciation 100000
    EBIT 140000
    taxes 56000
    income after tax 84000
    add back deprec 100000
    ATCF 184000

    e. NPV
    initial investment 500000
    PV of atcf ₹ 697,504.77
    opp cost of salary 62589
    opp cost of capacity 54126
    opp cost of van 6823
    WC 0
    NPV ₹ 73,966.77

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