ALLIED FOODS

cost of the equipment

capatilized expenses
amount to be depreciated
Additional WC
Total intial investment

End of years
cash flows
Operating cost
operating cash flows
Depreciation rates
depreciation expense (-)
before tax cash flows
tax @ 40%
after tax cash flows
plus depreciation
operating cash flows
WCC
After tax salvage value
net operating cash flows
present value of cash inflows
Net present value

200000
40000
240000
20000
260000

Unit cost
PRU
tax rate
wacc
cost
salavage value
Working capital

1
200000
120000
80000
33%
-79200
800
320
480
79200
79680

2
200000
120000
80000
45%
-108000
-28000
-11200
-16800
108000
91200

3
200000
120000
80000
15%
-36000
44000
17600
26400
36000
62400

79680
255970
-4030

91200

62400

100000
2
40%
10%
60%
25000
20000
4
200000
120000
80000
7%
-16800
63200
25280
37920
16800
54720
20000
15000
89720

11.5
Amount to be depriciated
WC
totoal investment
cash flowa

250000
25000
275000

End of year
cash flows
depriciation rate
depriciation
Before tax operating CF
tax
after tax cash flows
depricaition
operating cash flows
wc
salavage value
Net operating cash flows
net present value of cash flows
NPV

90000
108000
72000

Salavage value
tax
wacc

23000
40%
10%

1
90000
33%
82500
7500
3000
4500
82500
87000

2
90000
45%
112500
-22500
-9000
-13500
112500
99000

3
90000
15%
37500
52500
21000
31500
37500
69000

4
90000
7%
17500
72500
29000
43500
17500
61000

87000
$312,035
$37,035

99000

69000

61000

37035
77976 increase 20%
-3905 dec. 20%

5
90000
0
90000
36000
54000
0
54000
25000
13800
92800

11.6
cost of equipment
life
tax
wacc

cash flow
dep.
btcf
tax
atcf
ncf

end of years
tax shield

800000
4 dep.
40%
10%

1000000
200000
800000
320000
480000
680000

1
80000

200,000.00

tax
atcf
tax shield
ncf

2
80000

1,000,000.00
400,000.00
600,000.00
80,000.00
680,000.00

3
80000

4
80000

$253,589.24

B
end of the year
cash flow
rates
depreciation
btcf
tax
atcf

1
800,000.00
33%
264,000.00
536,000.00
320,000.00
216,000.00

2
800,000.00
45%
360,000.00
440,000.00
320,000.00
120,000.00

3
800,000.00
15%
120,000.00
680,000.00
320,000.00
360,000.00

4
800,000.00
7%
56,000.00
744,000.00
320,000.00
424,000.00

tax benefits

105,600.00

144,000.00

48,000.00

22,400.00

NPV

$266,370.88

difference

$12,782

11.7
cost of asset
modify
amount to be dep.
nowc
total investment

end of year
cash flows`
dep rates
dep.
btcf
tax
atcf
atcf
NOWC
salvage value
net cash flow
net present value
NPV

140,000.00 tax
30000 wacc
170,000.00
8000
178,000.00

1
50000
33%
56,100.00
(6,100.00)
(2,440.00)
(3,660.00)
52,440.00

2
50000
45%
76,500.00
(26,500.00)
(10,600.00)
(15,900.00)
60,600.00

52,440.00

60,600.00

$158,451.35
($19,548.65)

40%
12%
salvage value
new s.value
aft. Tax s. v

3
50000
15%
25,500.00
24,500.00
9,800.00
14,700.00
40,200.00
8000
40,760.00
88,960.00

60000
48,100.00
19,240.00

7%

terminal value

48,760.00

11.8
cost
modify
amount to be dep.
wc
t. invst

end of the year

opt. cash flows
dep. Rate
dep.
BFCF
TAX
ATCF
Net operating cF
wc
salvage value
ncf
present value of cf
NPV

108000
12500
120500
5500
126000

1
2
44000
44000
33%
45%
39765
54225
4235
-10225
1482.25 -3578.75
2752.75 -6646.25
42517.75 47578.75

42517.75 47578.75
$136,840.44
$10,840.44

salvage value
wacc
tax

3
44000
15%
18075
25925
9073.75
16851.25
34926.25
5500
45202.25
85628.5

65000
8435
12%
56565
35% 19797.75

7%

11.9
project A
p

NCF
0.2
0.6
0.2

p*NCF
6000
1200
6750
4050
7500
1500

exp. NPV

-750
0
750

6750
COFF. Var

562500
0
562500

S.D

112500
0
112500
225000
474.3416

0.070273

10%
3
PVA

Project B
P

NCF
0.2
0.6
0.2

0
6750
18000
exp. NPV

0
4050
3600

-7650
-900
10350

58522500 11704500
810000
486000
107122500 21424500

7650
S.D

cof. Var

0.757888

33615000
5797.844

PVA

16786.58
10036.58

18373.77
11623.77