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Unit 11: Tax Outflow Arising From The Salvage Value in Year 3
Unit 11: Tax Outflow Arising From The Salvage Value in Year 3
Purchase
Unit 12
Unit 13
Total $ Forecast 2016 Forecast 2017
Sales 46 56
Operating expense 24 31
EBITDA 22 25
Less income tax 6.6 7.5
Less IFCI 0.6 1
Less IWCI 0.9 1.5
FCF in Forecast period 13.9 15
Plus terminal value
Total FCF 13.9 15
Discount factor 10% 0.91 0.83
Enterprise value 232.17 12.64 12.40
Less Debt 82.1
Equity value 150.07
Unit 14
Year 0 Year 1 Year 2
Investment cost not incurred 600,000
Lease payment - 165,000 - 165,000 - 165,000
Tax benefit from lease payment 49,500 49,500
Tax benefit forgone (depreciation) - 45,000 - 45,000
Residual value
Net benefits 435,000 - 160,500 - 160,500
Discount factor 4% 1 0.9615384615 0.924556213018
Present value 435,000 - 154,327 - 148,391
NPV 2,933
Decision Lease
Calculated actual working capital
55,000
24,675
30,325
55.1%
13,630.19
4,403.27
2,496.12
15,537
60
50
29
26,721.27
49,500
- 45,000
- 150,000
- 145,500
0.888996358670915
- 129,349
Alternative presentation of depreciation - Gross format
Year 0 Year 1 Year 2 Year 3
Initial cost -150000
Disposal (old item) 10000
Extra sale 66000 66000 66000
less Training cost -5000
less Service cost -2000
less Depreciation -50000 -50000 -50000
Operating income before tax 14000 16000 16000
Tax effect at 30% 1500 -4200 -4800 -4800
Operating income after tax 9800 11200 11200
plus depreciation 50000 50000 50000
Salvage value ( new oven) 15000
tax on disposal -4,500
Net cash flow -143500 59800 61200 71700
Discount factor 10% 1 0.909091 0.826446 0.751315
Adjusted cash flow -143500 54363.64 50578.51 53869.27
NPV 15311.42