5

CAPITAL BUDGETING WORKSHEET

Equity 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=

Deprec. method(1:St.line;2:DDB)=
Tax Credit (if any )=
Other invest.(non-depreciable)=

DISCOUNT RATE
$40,000
50%

Fixed expenses in year 1=

$10,000

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

Tax rate on net income=

2a. Beta

40%

b. Riskless rate=

If you do not have the breakdown of fixed and variable

c. Market risk premium =

10%

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

d. Debt Ratio =

e. Cost of Borrowing =
Discount rate used=

WORKING CAPITAL
Initial Investment in Work. Cap=

$10,000

Working Capital as % of Rev=

25%

Salvageable fraction at end=

100%

GROWTH RATES
1

CAPITAL BUDGETING WORKSHEET

Revenues

Do not enter

10.00%

10.00%

10.00%

10.00%

0.00%

0.00%

Fixed Expenses

Do not enter

10.00%

10.00%

10.00%

10.00%

0.00%

0.00%

$0
$0

$0
$0

$0
$0

OPERATING CASHFLOWS
1
1
$53,240
$58,564
$26,620
$29,282
$0
$0
$26,620
$29,282
$5,120
$4,096
$21,500
$25,186
$8,600
$10,074
$12,900
$15,112
$5,120
$4,096
$1,210
$1,331
$16,810
$17,877
1.5
1.66

1
$58,564
$29,282
$0
$29,282
$3,277
$26,005
$10,402
$15,603
$3,277
$0
$18,880
1.84

1
$58,564
$29,282
$0
$29,282
$2,621
$26,661
$10,664
$15,996
$2,621
$0
$18,618
2.04

Default: The fixed expense growth rate is set equal to the growth rate in revenues by default.
YEAR
0

$0
$0

$0
$0

$0
$0

1
$40,000
$20,000
$0
$20,000
$10,000
$10,000
$4,000
$6,000
$10,000
$0
$16,000
1.11

1
$44,000
$22,000
$0
$22,000
$8,000
$14,000
$5,600
$8,400
$8,000
$1,000
$15,400
1.23

1
$48,400
$24,200
$0
$24,200
$6,400
$17,800
$7,120
$10,680
$6,400
$1,100
$15,980
1.36

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

Equipment
Working Capital

Lifetime Index
Revenues
-Var. Expenses
- Fixed Expenses
EBITDA
- Depreciation
EBIT
-Tax
EBIT(1-t)
+ Depreciation
- Work. Cap
NATCF
Discount Factor

($62,484)
1

SALVAGE VALUE
$0
$0

CAPITAL BUDGETING WORKSHEET

Discounted CF

($62,484)

$14,455

Investment Measures
NPV =
$47,928
IRR =
23.55%
ROC =
60.12%

$12,570

$11,784

$11,200

$10,761

$10,268

$9,148

CAPITAL BUDGETING WORKSHEET

Book Value (beginning)

Depreciation
BV(ending)

$50,000

$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

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

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

CAPITAL BUDGETING WORKSHEET

DISCOUNT RATE

roach(1:Direct;2:CAPM)=

iscount rate =

10%
0.9
8.00%

Market risk premium =

5.50%
30.00%

Cost of Borrowing =

9.00%

count rate used=

10.69%

10

CAPITAL BUDGETING WORKSHEET

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

10

$0
$0

$0
$0

$10,000
$14,641

1
$58,564
$29,282
$0
$29,282
$486
$28,796
$11,518
$17,278
$486
$0
$17,764
2.25

1
$58,564
$29,282
$0
$29,282
$0
$29,282
$11,713
$17,569
$0
$0
$17,569
2.49

1
$58,564
$29,282
$0
$29,282
$0
$29,282
$11,713
$17,569
$0
$0
$17,569
2.76

10

CAPITAL BUDGETING WORKSHEET

$7,885

$7,046

$15,294

11

CAPITAL BUDGETING WORKSHEET

$10,486
$486
$10,000

$10,000
$0
$10,000

$10,000
$0
$10,000

12