uity Analysis of a Project

INPUT SHEET: USER ENTERS ALL BOLD NUMBERS

INITIAL INVESTMENT

CASHFLOW DETAILS

Initial Investment=

$50,000

Revenues in year 1=

Opportunity cost (if any)=

$7,484

Var. Expenses as % of Rev=

Lifetime of the investment

10

Salvage Value at end of project=

Tax Credit (if any )=

Other invest.(non-depreciable)=

50%

Fixed expenses in year 1=

$10,000

Deprec. method(1:St.line;2:DDB)=

$40,000

Tax rate on net income=

40%

If you do not have the breakdown of fixed and variable

10%

expenses, input the entire expense as a % of revenues.

WORKING CAPITAL
Initial Investment in Work. Cap=

$10,000

Working Capital as % of Rev=

25%

Salvageable fraction at end=

100%

GROWTH RATES
1

Revenues

Do not enter

10.00%

10.00%

10.00%

10.00%

Fixed Expenses

Do not enter

10.00%

10.00%

10.00%

10.00%

Default: The fixed expense growth rate is set equal to the growth rate in revenues by default.
YEAR
0
1
2
3
4
INITIAL INVESTMENT
Investment
$50,000
- Tax Credit
$5,000
Net Investment
$45,000
+ Working Cap
$10,000
+ Opp. Cost
$7,484
+ Other invest.
$0
Initial Investment
$62,484
SALVAGE VALUE
Equipment
Working Capital
OPERATING CASHFLOWS
Lifetime Index
Revenues
-Var. Expenses
- Fixed Expenses
EBITDA
- Depreciation

$0
$0

$0
$0

$0
$0

$0
$0

$0
$0

1
$40,000
$20,000
$0
$20,000
$10,000

1
$44,000
$22,000
$0
$22,000
$8,000

1
$48,400
$24,200
$0
$24,200
$6,400

1
$53,240
$26,620
$0
$26,620
$5,120

1
$58,564
$29,282
$0
$29,282
$4,096

EBIT
-Tax
EBIT(1-t)
+ Depreciation
- Work. Cap
NATCF
Discount Factor
Discounted CF

$(62,484)
1
$(62,484)

Investment Measures
NPV =
IRR =
ROC =

Book Value (beginning)

Depreciation
BV(ending)
$50,000

$10,000
$4,000
$6,000
$10,000
$0
$16,000
1.10685
$14,455

$14,000
$5,600
$8,400
$8,000
$1,000
$15,400
1.225116923
$12,570

$17,800
$7,120
$10,680
$6,400
$1,100
$15,980
1.356020666
$11,784

$21,500
$8,600
$12,900
$5,120
$1,210
$16,810
1.500911474
$11,200

$25,186
$10,074
$15,112
$4,096
$1,331
$17,877
1.661283865
$10,761

$47,928
23.55%
60.12%

$50,000
$10,000
$40,000

$40,000
$8,000
$32,000

BOOK VALUE & DEPRECIATION

$32,000
$25,600
$20,480
$6,400
$5,120
$4,096
$25,600
$20,480
$16,384

S ALL BOLD NUMBERS

DISCOUNT RATE
Approach(1:Direct;2:CAPM)=
1. Discount rate =

2
10%

2a. Beta

0.9

b. Riskless rate=

8.00%

of fixed and variable

c. Market risk premium =

5.50%

as a % of revenues.

d. Debt Ratio =

30.00%

e. Cost of Borrowing =

9.00%

Discount rate used=

10.69%

10

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

10

$0
$0

$0
$0

$0
$0

$0
$0

$10,000
$14,641

1
$58,564
$29,282
$0
$29,282
$3,277

1
$58,564
$29,282
$0
$29,282
$2,621

1
$58,564
$29,282
$0
$29,282
$486

1
$58,564
$29,282
$0
$29,282
$0

1
$58,564
$29,282
$0
$29,282
$0

$26,005
$10,402
$15,603
$3,277
$0
$18,880
1.838792046
$10,268

$26,661
$10,664
$15,996
$2,621
$0
$18,618
2.035266976
$9,148

$28,796
$11,518
$17,278
$486
$0
$17,764
2.252735252
$7,885

$29,282
$11,713
$17,569
$0
$0
$17,569
2.493440014
$7,046

$29,282
$11,713
$17,569
$0
$0
$17,569
2.759864079
$15,294

$16,384
$3,277
$13,107

$13,107
$2,621
$10,486

$10,486
$486
$10,000

$10,000
$0
$10,000

$10,000
$0
$10,000