Year 0

Project Benefits
Labour cost reduction
Stationaries reduction
Others
TOTAL BENEFITS
Project costs
Software & Hardware purchases
Services
Employee Salary
Telecomunication
Maintainance cost
TOTAL EXPENSES
EBITD
Less Depreciation
EBIT
Less Taxes (25%)
NET INCOME
Operating Cashflow
INITIAL INVESTMENT

Year 1

Year 2

$4.0
$5.0
$4.0
$13.0

$4.3
$5.8
$4.2
$14.3

$1.0
$1.0
$0.9
$1.0
$0.5
$4.4
$8.6
$4.5
$4.1
$1.0
$3.1
$7.6

$2.5
$1.9
$1.5
$1.1
$1.7
$8.7
$5.6
$4.5
$1.1
$0.3
$0.8
$5.3

$18

Calculation Of Depreciation
Note: Assuming that life of project is only 4 years as technology may change after 4 years and using straight line
method following are the calculations
Depreciation= $18/4= $4.5 Per Year
Year
Cash Flow
Intial Investment

0
-$18
$18

1
$7.6

2
$5.3

Net Present Value

NPV= Present Value of future cash flow- Initial Investment
Discount Rate
2%
4%
6%
8%
10%

PV Future CF
$29.37
$27.88
$26.52
$25.25
$24.08

NPV
$11.37
$9.88
$8.52
$7.25
$6.08

PI
1.63
1.55
1.47
1.40
1.34

12%
14%
16%
18%
20%

$23.00
$21.99
$21.05
$20.18
$19.36

$5.00
$3.99
$3.05
$2.18
$1.36

$35.00
Net Present Value NPV=
Present Value of future
cash flow- Initial
Investment PV Future CF

$30.00
$25.00
$20.00

Net Present Value NPV=

Present Value of future
cash flow- Initial
Investment NPV

$15.00
$10.00

Net Present Value NPV=

Present Value of future
cash flow- Initial
Investment PI

$5.00
$0.00
0%

5%

10%

15%

20%

25%

1.28
1.22
1.17
1.12
1.08

Year 3

Year 4

$5.0
$6.0
$5.0
$16.0

$8.7
$6.9
$7.0
$22.6

$2.2
$2.1
$1.6
$1.1
$1.7
$8.7
$7.3
$4.5
$2.8
$0.7
$2.1
$6.6

$2.0
$2.5
$1.7
$1.0
$1.6
$8.8
$13.8
$4.5
$9.3
$2.3
$7.0
$11.5

hange after 4 years and using straight line

3
$6.6

4
$11.5

Internal Rate Of Return (IRR)

24%

PAYBACK PERIOD
Year
Cash Flow
0
1
2
3
4

Cumulative Cash Flow

($18.0)
$7.6
$5.3
$6.6
$11.5

($18.0)
($10.4)
($5.1)
$1.5
$13.0

Payback Period = Year before full recovery + Remaining Balance to be

recovered/Cash flow in next year
$2.77

Assume that each year price of tags are going down around 10 percent due to whi

Year 0

Year 1

Project Benefits
Labour cost reduction
Stationaries reduction
Others
TOTAL BENEFITS
Project costs
Software & Hardware purchases
Services
Employee Salary
Telecomunication
Maintainance cost
TOTAL EXPENSES
EBITD
Less Depreciation
EBIT
Less Taxes (25%)
NET INCOME
Operating Cashflow
INITIAL INVESTMENT

Year 2

$3.0
$5.0
$3.0
$11.0

$4.3
$5.0
$5.0
$14.3

$1.0
$1.0
$0.8
$1.0
$0.5
$4.3
$6.7
4.5
$2.2
$0.55
$1.65
$6.15

$2.0
$2.0
$1.1
$0.9
$1.8
$7.8
$6.5
4.5
$2.0
$0.50
$1.50
$6.00

$18

Calculation Of Depreciation
Note: Assuming that life of project is only 4 years as technology may change after 4 years and using straight
following are the calculations
Depreciation= $18/4= $4.5 Per Year
Year
Cash Flow
Intial Investment

-$18
$18

$6.15

$6.00

Net Present Value

NPV= Present Value of future cash flow- Initial Investment
Discount Rate

PV Future CF
5%
10%
15%
20%

$25.34
$22.43
$20.03
$18.01

NPV

PI

$7.34
$4.43
$2.03
$0.01

$1.41
$1.25
$1.11
$1.00

25%
30%
35%
40%
45%
50%

$16.30
$14.85
$13.59
$12.51
$11.57
$10.74

($1.7)
($3.2)
($4.4)
($5.5)
($6.4)
($7.3)

$0.91
$0.82
$0.76
$0.70
$0.64
$0.60

down around 10 percent due to which cost is also decreasing and its creating more benefits for the company

Year 3

Year 4

$5.0
$5.9
$5.0
$15.9

$8.0
$6.0
$6.5
$20.5

$2.0
$2.1
$1.4
$1.0
$1.9
$8.4
$7.5
4.5
$3.0
$0.75
$2.25
$6.75

$2.1
$2.0
$1.0
$2.0
$1.6
$8.7
$11.8
4.5
$7.3
$1.83
$5.48
$9.98

ange after 4 years and using straight line method

$6.75

$9.98

Internal Rate Of Return (IRR)

20%

PAYBACK PERIOD
Year
Cash Flow
0
1
2
3
4

Cumulative Cash Flow

-18
$6.15
$6.00
$6.75
$9.98

($18.0)
($11.9)
($5.9)
$0.9
$10.9

Payback Period = Year before full recovery + Remaining Balance to be

recovered/Cash flow in next year

2.867

e company

Assume that revenue is decreased by 15 percent as technology is too common and competition is too toug

Year 0
Project Benefits
Labour cost reduction
Stationaries reduction
Others
TOTAL BENEFITS
Project costs
Software & Hardware purchases
Services
Employee Salary
Telecomunication
Maintainance cost
TOTAL EXPENSES
EBITD
Less Depreciation
EBIT
Less Taxes (25%)
NET INCOME
Operating Cashflow
INITIAL INVESTMENT

Year 1

Year 2

$3.5
$4.2
$4.3
$12.0

$4.0
$5.8
$4.6
$14.4

$1.0
$1.0
$1.2
$0.9
$1.0
$5.1
$6.9
0
$6.9
$1.74
$5.21
$5.21

$2.0
$1.5
$0.9
$1.2
$1.8
$7.4
$7.0
0
$7.0
$1.75
$5.25
$5.25

$18

Calculation Of Depreciation
Note: Assuming that life of project is only 4 years as technology may change after 4 years and using straight
following are the calculations
Depreciation= $18/4= $4.5 Per Year
Year
Cash Flow
Intial Investment

-$18
$18

$5.21

$5.25

NPV

PI

Net Present Value

NPV= Present Value of future cash flow- Initial Investment
Discount Rate

PV Future CF
2%
4%

$23.49
$22.30

$5.49
$4.30

6%
8%
10%
12%
14%
16%
18%
20%

$21.20
$20.18
$19.24
$18.37
$17.56
$16.80
$16.10
$15.44

$3.20
$2.18
$1.24
$0.37
($0.4)
($1.2)
($1.9)
($2.6)

o common and competition is too tough in market

Year 3

Year 4

$4.2
$6.0
$6.0
$16.2

$7.5
$6.5
$6.8
$20.8

$2.0
$1.8
$2.0
$1.1
$1.7
$8.6
$7.6
0
$7.6
$1.90
$5.70
$5.70

$2.1
$2.5
$2.1
$1.1
$1.5
$9.3
$11.5
0
$11.5
$2.88
$8.63
$8.63

hange after 4 years and using straight line method

$5.70

$8.63

Internal Rate Of Return (IRR)

13%

PAYBACK PERIOD
Year
Cash Flow
0
1
2
3
4

Cumulative Cash Flow

-$18
$5.21
$5.25
$5.70
$8.63

($18.0)
($12.8)
($7.5)
($1.8)
$6.8

Payback Period = Year before full recovery + Remaining Balance to

be recovered/Cash flow in next year

3.32