Business Finance

with new investment
2003
180,000
89,100,000
Unit sold
Revenue
COGS
COGS/unit
opex
2004
150,000
74,250,000
44,550,000
297
16,335,000
22
0
-
Revenue increase by
expense increase by
COGS increase by
MACRS
year
5 year assets
depreciation
2005
189,000
93,555,000
50,519,700
267.3
24,324,300
1
43,065,000
13,216,500
20,225,700
starting in 2008
0
0.20
3,600,000
1
0.32
5,760,000
Incremental Approach
Year
Invest new machine
Sell a division of a firm
Tax on sale
Revenue increase
COGS increase
Expense Increase
Less: depre exp
Income before Tax
Less Tax 34%
Income after Tax
plus depre exp
After tax Net Cash Flows

Terminal CF
Total cash flow in last period
Year
Initial investment
AT Revenue increase
AT COGS increase
Expense Increase
TS depre
2003
0
18,000,000
3,600,000
3,600,000
1,224,000
2,376,000
3,600,000
1,224,000
85,385,843
-18000000
102,161,843
2004
43,065,000
23,255,100
11,196,900
5,760,000
2,853,000
970,020
1,882,980
5,760,000
7,642,980
7,642,980
2005
1
- - 1,224,000
2
28,422,900
15,348,366
7,389,954
1,958,400
Annual cash flow

terminal value
Total Net Cash Flow
0
1
2
3
4
5
6
NPV
IRR
18,000,000
14.50%
18,000,000
1,224,000
7,642,980
13,512,060
14,847,840
14,786,640
114,347,123
64,797,014
59.02%
1,224,000
7,642,980
1,224,000
7,642,980
1,068,995.63
5,829,774.41
9,001,297.28
8,638,559.57
7,513,496.11
50,744,890.67
82,797,013.68
2006
246,000
121,770,000
65,755,800
267.3
31,660,200
2007
264,000
130,680,000
70,567,200
267.3
33,976,800
2008
###
130,680,000
70,567,200
267.3
33,976,800
2009
264,000
130,680,000
70,567,200
267.3
33,976,800
2
93,555,000
25,452,900
48,826,800
3
106,920,000
28,749,600
56,311,200
4
106,920,000
28,749,600
56,311,200
5
106,920,000
28,749,600
56,311,200
2
0.19
3,420,000
3
0.12
2,160,000
4
0.11
1,980,000
5
0.06
1,080,000
93,555,000
50,519,700
24,324,300
3,420,000
15,291,000
5,198,940
10,092,060
3,420,000
106,920,000
57,736,800
27,799,200
1,980,000
19,404,000
6,597,360
12,806,640
1,980,000
106,920,000
57,736,800
27,799,200
1,080,000
20,304,000
6,903,360
13,400,640
1,080,000
13,512,060
14,847,840
14,786,640
13,512,060
14,847,840
14,786,640
14,480,640
85,385,843
99,866,483
114,347,123
2007
2008
2009
2006
3
106,920,000
57,736,800
27,799,200
2,160,000
19,224,000
6,536,160
12,687,840
2,160,000
61,746,300
33,343,002 16,054,038 1,162,800
4
70,567,200
38,106,288 18,347,472 734,400
5
70,567,200
38,106,288 18,347,472 673,200
6
70,567,200
38,106,288
18,347,472
367,200
13,512,060
14,847,840
14,786,640
13,512,060
14,847,840
14,786,640
14,480,640
99,866,483
114,347,123
without new investment

Unit Price
COGS
OPEX
495
267.3
26% x T. Revenue
Unit sold
Revenue
COGS/unit
COGS
opex
MACRS
10 year assets
Without new investment

Year
Initial investment
Revenue
Less COGS
LESS EXP
LESS depre
Income before TAX
less: tax 34%
Income after Tax
plus depre
Annual cash flow
Terminal value
Total cash flow in final year
Without new investment

Year
Initial investment
AT Revenue
AT COGS
AT expense
TS depre
Annual cash flow
terminal value
Total Net Cash Flow
With new investment
Year
Initial investment
AT Revenue increase
AT COGS increase
Expense Increase
TS depre
Annual cash flow
terminal value
Total Net Cash Flow
2003
180,000
89,100,000
2004
150,000
74,250,000
297
44,550,000
16,335,000
2005
102,000
50,490,000
297
30,294,000
11,107,800
cost
2006
57,000
28,215,000
###
16,929,000
6,207,300
56,000,000
depre/year
5,600,000
1999-2004
28,000,000
The initial investment $56M had been made in early 2002
1999
2000
2001
0.10
0.18
0.14
5,600,000
10,080,000
7,840,000
2003
0
2004
2002
0.12
6,720,000
2005
2006
74,250,000
44,550,000
16,335,000
3,920,000
9,445,000
3,211,300
6,233,700
3,920,000
10,153,700
50,490,000
30,294,000
11,107,800
3,920,000
5,168,200
1,757,188
3,411,012
3,920,000
7,331,012
28,215,000
16,929,000
6,207,300
3,920,000
1,158,700
393,958
764,742
3,920,000
4,684,742
0
-
2003
0
2004
2005
1
2006
2
2003
49005000
-29403000
-10781100
1,332,800.00
10153700
33323400
-19994040
-7331148
1,332,800.00
7331012
18621900
-11173140
-4096818
1,332,800.00
4684742
10153700
7331012
4684742
2004
2005
2006
0
18,000,000
18,000,000
74,250,000
44,550,000 16,335,000 1,224,000
14,589,000
93,555,000
50,519,700 24,324,300 1,958,400
20,669,400
14,589,000
20,669,400
3
121,770,000
65,755,800
31,660,200
1,162,800
25,516,800
25,516,800
2007
48,000
23,760,000
297
14,256,000
5,227,200
2008
48,000
23,760,000
297
14,256,000
5,227,200
2009 Unit Price

### COGS
23,760,000 OPEX
###
14,256,000
5,227,200
Year 0
2003
0.09
5,040,000
2004
0.07
3,920,000
2007
1
2005
###
3,920,000
2008
5
23,760,000
14,256,000
5,227,200
3,920,000
356,800
121,312
235,488
3,920,000
4,155,488
23,760,000
14,256,000
5,227,200
3,360,000
916,800
311,712
605,088
3,360,000
3,965,088
23,760,000
14,256,000
5,227,200
1,680,000
2,596,800
882,912
1,713,888
1,680,000
3,393,888
23,406,124
26,800,012
2007
2008
4
0
1
2
3
4
5
6
15681600
-9408960
-3449952
1,142,400.00
3965088
15681600
-9408960
-3449952
571,200.00
3393888
23406124
4155488
3965088
26800012
2008
3
2007
0.07
3,920,000
2009
15681600
-9408960
-3449952
1,332,800.00
4155488
2007
2
2006
0.07
3,920,000
2009
495
297
22% x T. Revenue
2009
NPV
130,680,000
70,567,200 33,976,800 734,400
26,870,400
130,680,000
70,567,200 33,976,800 673,200
26,809,200
26,870,400
26,809,200
6
130,680,000
70,567,200
33,976,800
367,200
26,503,200
182,780,690
209,283,890
1
2
3
4
5
6
NPV
115,731,243
T. Revenue
4
2008
0.06
3,360,000
0
10,153,700
7,331,012
4,684,742
4,155,488
3,965,088
26,800,012
18,000,000
5
2009
0.03
1,680,000
8,867,860
5,591,817
3,120,824
2,417,687
2,014,770
11,893,292
33,906,249
14,589,000
20,669,400
25,516,800
26,870,400
26,809,200
209,283,890
149,637,492
12,741,485
15,765,832
16,998,467
15,633,355
13,622,488
92,875,866
167,637,492

Year
Unit Sold
Total Sales
COGS
OPEX
MACRS
10 year assets
depreciation
2006
1,500,000
592,500,000
355,500,000
2007
1,200,000
474,000,000
284,400,000
113,760,000
2008
920,000
363,400,000
218,040,000
87,216,000
The initial investment $56M had been made in early 2002

2002
2003
2004
0.10
0.18
0.14
5,600,000
10,080,000
7,840,000
year 1
year 2
2007
0.07
3,920,000
Without new investme

Year
Initial investment
AT Revenue increase
AT COGS increase
Expense Increase
TS depre
Annual cash flow
terminal value
Total Net Cash Flow
2006
0
year 3
2008
0.07
3,920,000
2007
2009
570,000
225,150,000
135,090,000
54,036,000
2010
300,000
118,500,000
71,100,000
28,440,000
2005
0.12
6,720,000
2006
0.09
5,040,000
year 4
2009
0.07
3,920,000
2008
year 5
2010
0.07
3,920,000
2009
2011
0.06
3,360,000
2010
331,800,000
199,080,000
79,632,000
1,176,000
54,264,000
254,380,000
152,628,000
61,051,200
1,176,000
41,876,800
157,605,000
94,563,000
37,825,200
1,176,000
26,392,800
82,950,000
49,770,000
19,908,000
1,176,000
14,448,000
54,264,000
41,876,800
26,392,800
14,448,000
18%
0
1
2
3
4
5
6
NPV
0
54,264,000
41,876,800
26,392,800
14,448,000
14,280,000
90,309,333
45,986,441
30,075,266
16,063,473
7,452,118
6,241,920
33,453,425
139,272,642
Unit price
COGS
opex
395.00
237.00
0.24*sale
2011
300,000
118,500,000
71,100,000
28,440,000
2012
300,000
118,500,000
71,100,000
28,440,000
year 6
2012
0.03
1,680,000
2011
2012
5
82,950,000
49,770,000
19,908,000
1,008,000
14,280,000
82,950,000
49,770,000
19,908,000
504,000
13,776,000
76,533,333
90,309,333
14,280,000
Unit sold minus 20%

Cost of capital 3% higher
with new investment ($18M)

Year
Unit Sold
Total Sales
COGS
OPEX
MACRS
year
5 year assets
depreciation
2006
1,500,000
592,500,000
2007
1,200,000
474,000,000
284,400,000
113,760,000
starting in 2008, buy in 2006

0
0.20
3,600,000
Revenue increase by
expense increase by
COGS increase by
Year
Invest new investment
AT Revenue increase
AT Expense Increase
TS on depreciation (new invest)
AT COGS Increase
Cash flow from changes in NOWC
Terminal value
Total net cash flow
0
0
0
2006
0
18,000,000
2007
1
18,000,000
1,080,000
1,080,000
18,000,000
1,080,000
2006
Inventory
Accounts Receivable
Accounts Payable
Net Operating Working Capital
Changes in net working capital
2007
01
23
4
18%
18,000,000
1,080,000
18,875,200 52,091,600
82,049,600
915,254
13,555,875
31,704,556
42,320,271
5
6
NPV
IRR
90,843,600
667,704,267
330,431,500
105.51
39,708,575
247,338,719
348,431,500
2008
1,272,000
502,440,000
271,317,600
130,634,400
2009
1,648,000
650,960,000
351,518,400
169,249,600
2010
1,872,000
739,440,000
399,297,600
192,254,400
2011
1,872,000
739,440,000
399,297,600
192,254,400
1
0.32
5,760,000
2
0.19
3,420,000
3
0.12
2,160,000
4
0.11
1,980,000
139,040,000
43,418,400
53,277,600
425,810,000
115,213,600
216,428,400
620,940,000
163,814,400
328,197,600
620,940,000
163,814,400
328,197,600
2008
2009
2
2010
3
2011
4
97,328,000
30,392,880 1,728,000
37,294,320 31,368,800
50,244,000 -
18,875,200
52,091,600
82,049,600
90,843,600
2008
50,244,000
50,244,000
50,244,000 50,244,000
50,244,000
50,244,000 -
2009
65,096,000
65,096,000
65,096,000 65,096,000
14,852,000
14,852,000 -
2010
73,944,000
73,944,000
73,944,000 73,944,000
8,848,000
8,848,000
2011
73,944,000
73,944,000
73,944,000
73,944,000
0
0
298,067,000
80,649,520 1,026,000
151,499,880 66,943,600
14,852,000 -
434,658,000
114,670,080 648,000
229,738,320 90,897,600
8,848,000
434,658,000
114,670,080
594,000
229,738,320
90,843,600
-
2012
1,872,000 Unit price 395.00
739,440,000 COGS
213.30
399,297,600 opex
0.26*sale
192,254,400
5
0.06
1,080,000
620,940,000
163,814,400
328,197,600
2012
6
434,658,000
114,670,080
324,000
229,738,320
90,573,600
73,944,000
503,186,667
667,704,267
2012
73,944,000
73,944,000
73,944,000
73,944,000
73,944,000
73,944,000

Year
2006
Unit Sold
1,500,000
Total Sales
592,500,000
COGS
355,500,000
OPEX
2007
1,200,000
474,000,000
284,400,000
113,760,000
2008
920,000
363,400,000
218,040,000
87,216,000
2009
570,000
225,150,000
135,090,000
54,036,000
2010
300,000
118,500,000
71,100,000
28,440,000
2011
300,000
118,500,000
71,100,000
28,440,000
2012 Unit price 395.00

300,000 COGS
237.00
118,500,000 opex
0.24*sale
71,100,000
28,440,000

Year
Unit Sold
Total Sales
COGS
OPEX
2006
1,500,000
592,500,000
Revenue increase by
expense increase by
COGS increase by
MACRS
year
5 year assets
depreciation
Year
AT Revenue increase
AT Expense Increase
AT COGS Increase
Terminal value
Total net cash flow
2006
0
18,000,000
18,000,000
18,000,000
Accept positive NPV
Net Operating Working Capital and Cash Flow

2006
Inventory
Accounts Receivable
0
1
2
3
4
5
6
NPV
Accounts Payable
2007
1,200,000
474,000,000
284,400,000
113,760,000
-
2008
1,272,000
502,440,000
271,317,600
130,634,400
2009
1,648,000
650,960,000
351,518,400
169,249,600
139,040,000
43,418,400
53,277,600
425,810,000
115,213,600
216,428,400
1
0.32
5,760,000
2
0.19
3,420,000
2008, buy in 2006

0
0.20
3,600,000
2007
2008
1
2009
2
- 1,080,000
- 1,080,000
-
97,328,000
30,392,880 1,728,000
37,294,320 31,368,800
50,244,000 -
1,080,000 -
18,875,200
18%
18,000,000
1,080,000
18,875,200 52,091,600
82,049,600
90,843,600
667,704,267
330,431,500
915,254
13,555,875
31,704,556
42,320,271
39,708,575
247,338,719
348,431,500
2007
2008
50,244,000
50,244,000
298,067,000
80,649,520
1,026,000
151,499,880
66,943,600
14,852,000
52,091,600
2009
65,096,000
65,096,000
50,244,000 50,244,000
50,244,000
50,244,000 -
65,096,000
65,096,000
14,852,000
14,852,000
2010
1,872,000
739,440,000
399,297,600
192,254,400
2011
1,872,000
739,440,000
399,297,600
192,254,400
2012
1,872,000
739,440,000
399,297,600
192,254,400
620,940,000
163,814,400
328,197,600
620,940,000
163,814,400
328,197,600
620,940,000
163,814,400
328,197,600
3
0.12
2,160,000
4
0.11
1,980,000
5
0.06
1,080,000
2010
2011
4
2012
5
434,658,000
114,670,080 648,000
229,738,320 90,897,600
8,848,000
434,658,000
114,670,080 594,000
229,738,320 90,843,600
-
82,049,600
90,843,600
2010
73,944,000
73,944,000
2011
73,944,000
73,944,000
434,658,000
114,670,080
324,000
229,738,320
90,573,600
73,944,000
503,186,667
667,704,267
2012
0
0
73,944,000 73,944,000
8,848,000
8,848,000
73,944,000
73,944,000
0 0
0
73,944,000
73,944,000
Unit price
COGS
opex

Year
395.00 Unit Sold
213.30 Total Sales
0.26*sale
COGS
OPEX
2006
1,500,000
592,500,000
355,500,000
2007
1,200,000
474,000,000
284,400,000
113,760,000
2008
920,000
363,400,000
218,040,000
87,216,000
2009
570,000
225,150,000
135,090,000
54,036,000
2010
300,000
118,500,000
71,100,000
28,440,000
2011
300,000
118,500,000
71,100,000
28,440,000
2012
300,000
118,500,000
71,100,000
28,440,000

Year
Unit Sold
Total Sales
COGS
OPEX
2006
1,500,000
592,500,000
Revenue increase by
expense increase by
COGS increase by
MACRS
year
5 year assets
depreciation
Year
AT Revenue increase
AT Expense Increase
AT COGS Increase
Terminal value
Total net cash flow
2006
0
18,000,000
18,000,000
18,000,000
Accept positive NPV
Net Operating Working Capital and Cash Flow

2006
Inventory
Accounts Receivable
0
1
2
3
4
5
6
NPV
Accounts Payable
2007
1,200,000
474,000,000
284,400,000
113,760,000
-
2008
1,590,000
628,050,000
339,147,000
163,293,000
2009
2,060,000
813,700,000
439,398,000
211,562,000
264,650,000
76,077,000
121,107,000
588,550,000
157,526,000
304,308,000
1
0.32
5,760,000
2
0.19
3,420,000
2008, buy in 2006

0
0.20
3,600,000
2007
2008
1
2009
2
- 1,080,000
- 1,080,000
-
185,255,000
53,253,900 1,728,000
84,774,900 48,954,200
62,805,000 -
411,985,000
110,268,200
1,026,000
213,015,600
89,727,200
18,565,000
1,080,000 -
13,850,800
71,162,200
21%
18,000,000
1,080,000
13,850,800 71,162,200
105,718,000
116,724,000
763,426,857
404,626,027
915,254
9,947,429
43,311,512
54,528,168
51,021,136
282,797,386
422,626,027
2007
2008
62,805,000
62,805,000
2009
81,370,000
81,370,000
62,805,000 62,805,000
62,805,000
62,805,000 -
81,370,000
81,370,000
18,565,000
18,565,000
2010
2,340,000
924,300,000
499,122,000
240,318,000
2011
2,340,000
924,300,000
499,122,000
240,318,000
2012
2,340,000
924,300,000
499,122,000
240,318,000
805,800,000
211,878,000
428,022,000
805,800,000
211,878,000
428,022,000
805,800,000
211,878,000
428,022,000
3
0.12
2,160,000
4
0.11
1,980,000
5
0.06
1,080,000
2010
2011
4
2012
5
564,060,000
148,314,600 648,000
299,615,400 116,778,000
11,060,000
564,060,000
148,314,600 594,000
299,615,400 116,724,000
-
105,718,000
116,724,000
2010
92,430,000
92,430,000
2011
92,430,000
92,430,000
564,060,000
148,314,600
324,000
299,615,400
116,454,000
92,430,000
554,542,857
763,426,857
2012
0
0
92,430,000 92,430,000
11,060,000
11,060,000
92,430,000
92,430,000
0 0
0
92,430,000
92,430,000
Unit price
COGS
opex

Year
395.00 Unit Sold
213.30 Total Sales
0.26*sale
COGS
OPEX
2006
1,500,000
592,500,000
355,500,000
2007
1,200,000
474,000,000
284,400,000
113,760,000
2008
920,000
363,400,000
218,040,000
87,216,000
2009
570,000
225,150,000
135,090,000
54,036,000
2010
300,000
118,500,000
71,100,000
28,440,000
2011
300,000
118,500,000
71,100,000
28,440,000
2012
300,000
118,500,000
71,100,000
28,440,000
Discount 10% on the unit price

Year
Unit Sold
Total Sales
COGS
OPEX
MACRS
2006
1,500,000
592,500,000
2007
1,200,000
474,000,000
284,400,000
113,760,000
year
5 year assets
depreciation
0
0.20
3,600,000
Revenue increase by
expense increase by
COGS increase by
Year
AT Revenue increase
AT Expense Increase
AT COGS Increase
Terminal value
Total net cash flow
2006
0
18,000,000
2007
1
18,000,000
1,080,000
1,080,000
18,000,000
1,080,000
2006
Inventory
Accounts Receivable
Accounts Payable
2007
01
23
4
18%
18,000,000
1,080,000
40,103,290 30,869,040
58,945,260
915,254
28,801,558
18,787,851
30,403,309
5
6
NPV
68,845,260
532,735,927
230,739,943
Year
Invest new machine
Revenue
Less: COGS
Less: Operating Expense
Less: Depresiation Expense
Income before Tax
Less Tax 30%
Income after Tax
plus depre exp
NOWC
Terminal CF
2006
0
18,000,000
30,092,898
197,342,189
248,739,943
2007
1
474,000,000
284,400,000
113,760,000
3,600,000
72,240,000
21,672,000
93,912,000
3,600,000
97,512,000
-
01
2
3
4
56
NPV
18,000,000
18%
18,000,000
97,512,000
44,622,090
115,549,560
140,798,340
150,806,340 1,073,576,340
571,401,120
97,512,000
82,637,288
32,046,890
70,327,030
72,622,217
65,918,841
397,686,536
589,401,120
2008
1,590,000
565,245,000
339,147,000
146,963,700
2009
2,060,000
732,330,000
439,398,000
190,405,800
2010
2,340,000
831,870,000
499,122,000
216,286,200
2011
2,340,000
831,870,000
499,122,000
216,286,200
1
0.32
5,760,000
2
0.19
3,420,000
3
0.12
2,160,000
4
0.11
1,980,000
201,845,000
59,747,700
121,107,000
507,180,000
136,369,800
304,308,000
713,370,000
187,846,200
428,022,000
713,370,000
187,846,200
428,022,000
2008
2009
2
2010
3
2011
4
141,291,500
41,823,390 1,728,000
84,774,900 16,421,210
56,524,500 -
355,026,000
95,458,860 1,026,000
213,015,600 47,577,540
16,708,500 -
499,359,000
131,492,340 648,000
299,615,400 68,899,260
9,954,000
499,359,000
131,492,340
594,000
299,615,400
68,845,260
-
40,103,290
30,869,040
58,945,260
68,845,260
2008
56,524,500
56,524,500
56,524,500 56,524,500
56,524,500
56,524,500 -
2009
73,233,000
73,233,000
73,233,000 73,233,000
16,708,500
16,708,500 -
2010
83,187,000
83,187,000
83,187,000 83,187,000
9,954,000
9,954,000
2011
83,187,000
83,187,000
83,187,000
83,187,000
0
0
2008
2009
2
565,245,000
339,147,000
146,963,700
5,760,000
73,374,300
22,012,290
95,386,590
5,760,000
101,146,590
56,524,500 44,622,090
2010
3
2011
4
732,330,000
439,398,000
190,405,800
3,420,000
99,106,200
29,731,860
128,838,060
3,420,000
132,258,060
16,708,500 -
831,870,000
499,122,000
216,286,200
2,160,000
114,301,800
34,290,540
148,592,340
2,160,000
150,752,340
9,954,000
831,870,000
499,122,000
216,286,200
1,980,000
114,481,800
34,344,540
148,826,340
1,980,000
150,806,340
-
115,549,560
140,798,340
150,806,340
2012
2,340,000 Unit price
831,870,000 COGS
499,122,000 opex
216,286,200
5
0.06
1,080,000
713,370,000
187,846,200
428,022,000
2012
6
355.50
191.97
0.26*sale
Question 3(b) how long the unit price i

Original Unit Price With new Investment
Unit price
COGS
opex
Year
Sale price
Units Sold
499,359,000
131,492,340
324,000
299,615,400
68,575,260
83,187,000
380,973,667
532,735,927
2012
83,187,000
83,187,000
83,187,000
83,187,000
83,187,000
83,187,000
/-COGS
-/- OPEX
depreciation
Earning before interest and tax
Year
Sale price
Units Sold
SG&A-DEPRE
Earning before interest and tax
Year
Invest new machine
Revenue
Less: COGS
Less: Operating Expense
Less: Depresiation Expense
Income before Tax
Less Tax 30%
Income after Tax
plus depre exp

NOWC
Terminal CF
2012
6
831,870,000
499,122,000
216,286,200
1,080,000
115,381,800
34,614,540
149,996,340
1,080,000
151,076,340
83,187,000
839,313,000
1,073,576,340
0
1
2
3
4
5
6
NPV
NOWC
Inventory
Accounts Receivable
Accounts Payable

Year
2006
Unit Sold
1,500,000
Total Sales
592,500,000
COGS
355,500,000
OPEX
2007
1,200,000
474,000,000
284,400,000
113,760,000
2008
920,000
363,400,000
218,040,000
87,216,000
long the unit price if profit margin is 0
with new investment ($1

Year
Unit Sold
Total Sales
COGS
OPEX
w Investment
395.00
213.30
0.26*sale
2007
2008
1
2009
2
1,200,000
284,400,000
113,760,000
3,600,000
2008
1
2011
4
2,060,000
439,398,000
211,562,000
3,420,000
2007
2010
3
1,590,000
339,147,000
163,293,000
5,760,000
2009
5
x
2,340,000
499,122,000
240,318,000
2,160,000
2009
570,000
225,150,000
135,090,000
54,036,000
2,340,000
499,122,000
240,318,000
1,980,000
2010
3
2011
4
319.1137320977 319.1137320977 319.1137320977 319.1137320977 319.1137320977
1,200,000
-
401,760,000
18,823,521 -
2006
0
18,000,000
1,590,000
2,060,000
2,340,000
2,340,000
508,200,000
809,166
654,380,000
2,994,288
741,600,000
5,126,133
741,420,000
5,306,133
2007
2008
1
382,936,479
284,400,000
113,760,000
3,600,000
18,823,521 5,647,056 24,470,578 -
2009
2010
507,390,834
339,147,000
163,293,000
5,760,000
809,166
242,750
1,051,916
657,374,288
439,398,000
211,562,000
3,420,000
2,994,288
898,286
3,892,575
746,726,133
499,122,000
240,318,000
2,160,000
5,126,133
1,537,840
6,663,973
18,000,000 -
18%
18,000,000
20,870,578
33,585,564
5,132,861
6,174,372
8,877,973
134,642,659
20,121,006
2006
3,600,000
20,870,578
-
5,760,000
4,708,084
38,293,648 -
3,420,000
7,312,575
12,445,436 -
2,160,000
8,823,973
14,998,345
20,870,578 -
33,585,564 -
5,132,861 -
6,174,372
2008
38,293,648
38,293,648
38,293,648 38,293,648
38,293,648
38,293,648 -
2009
50,739,083
50,739,083
50,739,083 50,739,083
12,445,436
12,445,436 -
2010
65,737,429
65,737,429
65,737,429
65,737,429
14,998,345
14,998,345
17,686,930
24,120,629
3,124,018
3,184,673
3,880,644
49,875,887
2,121,006
2007
2010
300,000
118,500,000
71,100,000
28,440,000
2011
300,000
118,500,000
71,100,000
28,440,000
2012 Unit price

300,000 COGS
118,500,000 opex
71,100,000
28,440,000
w investment ($18M)
2007
1,200,000
474,000,000
284,400,000
113,760,000
2008
1,590,000
628,050,000
339,147,000
163,293,000
2009
2,060,000
813,700,000
439,398,000
211,562,000
2012
6
x
2,340,000
499,122,000
240,318,000
1,080,000
0
2012
6
319.1137320977
2,340,000
740,520,000
6,206,133
2011
319.1137320977
11,870,000
3,787,880,000
-
2012
5
746,726,133
499,122,000
240,318,000
1,980,000
5,306,133
1,591,840
6,897,973
746,726,133
499,122,000
240,318,000
1,080,000
6,206,133
1,861,840
8,067,973
2010
2,340,000
924,300,000
499,122,000
240,318,000
1,980,000
8,877,973
8,877,973
2011
74,672,613
74,672,613
74,672,613 74,672,613
8935184.49874 0
1,080,000
9,147,973
74,672,613
50,822,072
134,642,659
2012
74,672,613
74,672,613
74,672,613
74,672,613
74,672,613
74,672,613
395.00
237.00
0.24*sale
2011
2,340,000
924,300,000
499,122,000
240,318,000
2012
2,340,000
924,300,000
499,122,000
240,318,000

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with new investment

After tax Net Cash Flows

Annual cash flow

without new investment

Without new investment

Without new investment

With new investment

2009 Unit Price

without new investment

The initial investment $56M had been made in early 2002

Without new investme

Unit sold minus 20%

with new investment ($18M)

starting in 2008, buy in 2006

without new investment

2012 Unit price 395.00

with new investment ($18M)

starting in 2008, buy in 2006

Accept positive NPV

Net Operating Working Capital and Cash Flow

2008, buy in 2006

without new investment

with new investment ($18M)

starting in 2008, buy in 2006

Accept positive NPV

Net Operating Working Capital and Cash Flow

2008, buy in 2006

without new investment

Discount 10% on the unit price

with new investment ($18M)

starting in 2008, buy in 2006

Question 3(b) how long the unit price i

plus depre exp

without new investment

long the unit price if profit margin is 0

with new investment ($1

319.1137320977 319.1137320977 319.1137320977 319.1137320977 319.1137320977

2012 Unit price

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