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Case 14 Restore Incorporation (USMAN NASIR) (MBA 123997)
Case 14 Restore Incorporation (USMAN NASIR) (MBA 123997)
No
1
2
3
4
Year
1996
1997
1998
1999
10.33%
USMAN NASIR
Value
1500
1400
3250
6150
60000
6150
53850
6731.25
24000
2400
Year
New Machine
Old Machine
Difference in Dep.
Tax Rate
Tax savings
1
6731.25
2400
4331.25
30%
1299.375
5
6731.25
2400
4331.25
30%
1299.375
6
6731.25
2400
4331.25
30%
1299.375
10500
6150.00
4305.00
Cashflows
7
6731.25
2400
4331.25
30%
1299.375
8
6731.25
2400
4331.25
30%
1299.375
Year
Purchase of Automaster I
Sale of Old Machine
Tax Savings
Net Salvage
Net Working Capital
Net Operating Income
0
-60000
10500
Net Cashflow
-51500
1299.375
-2000
8400
Rate
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
12%
13%
14%
15%
16%
9699.375
NPV
32400.00
28539.05
24933.85
21563.85
18410.42
15456.60
12686.95
10087.43
7645.20
5348.55
3186.78
1150.08
-770.52
-2583.24
-4295.64
-5914.67
-7446.70
Cashflows
2
NPV Profile
35000
30000
25000
20000
11.592%
15000
10000
5000
0
-50000%
-10000
1%
2%
3%
4%
5%
6%
7%
8%
Q.1
Q.4
Q.5
Q.6
Q.7
Q.8
Q.9
Q.10
Yes, given the balance sheet composition of the company and project revienues, an unforeseen obsolescene will significantly im