Machinary 200000

Time Period 5
Sales Price 25
Variable cost 5
Fixed Costs 350000
Corporate Tax 25%
Cost of capital 12%

0 1 2 3 4 5 It has to pr
Cash Outlay If it produc
Machinary 200000

Sales Price per unit 25 25 25 25 25

No. of units sold 20550 20550 20550 20550 20550
Total Sales 513750 513750 513750 513750 513750

Variable cost per unit 5 5 5 5 5

Total Variable cost 102750 102750 102750 102750 102750

Fixed Costs 350000 350000 350000 350000 350000

Depreciation 40000 40000 40000 40000 40000

PBT 21000 21000 21000 21000 21000

Tax 5250 5250 5250 5250 5250
PAT 15750 15750 15750 15750 15750
Operating Cash Flow -200000 55750 55750 55750 55750 55750
NPV ₹ 862.74
It has to produce approximate 20,550 units annually to breakeven.
If it produces more than that then it can go ahead with this project.
 Mixer X Mixer Y

Cost 400,000.00 600,000.00

Life 5.00 8.00
After-tax Cash Flow savings 120,000.00 130,000.00
Cost of Capital 0.11 0.11

Mixer X Mixer Y
Year Cash Flow PV @ 11%pa DCF Cash Flow PV @ 11%pa
0 -400,000.00 1.00 -400,000.00 -600,000.00 1.00
1 120,000.00 0.90 108,108.11 130,000.00 0.90
2 120,000.00 0.81 97,394.69 130,000.00 0.81
3 120,000.00 0.73 87,742.97 130,000.00 0.73
4 120,000.00 0.66 79,047.72 130,000.00 0.66
5 120,000.00 0.59 71,214.16 130,000.00 0.59
6 130,000.00 0.53
7 130,000.00 0.48
8 130,000.00 0.43
43,507.64

Mixer X Mixer Y
EAB 9,265.03 11,225.93
 We will select Mixer Y as its EAB is higher.

Mixer Y
DCF
-600,000.00
117,117.12
105,510.92
95,054.88
85,635.03
77,148.67
69,503.31
62,615.59
56,410.44
68,995.96
 Tamper A Tamper B
Cost 600000 750000
Life 5 7
Maintainance Cost 110000 90000
Disc. Rate 12% 12%

Mixer X Mixer Y
Year Cash Flow PV @ 11%pa DCF Cash Flow
0 -600,000.00 1.00 -600,000.00 -750,000.00
1 -110,000.00 0.89 -98,214.29 -90,000.00
2 -110,000.00 0.80 -87,691.33 -90,000.00
3 -110,000.00 0.71 -78,295.83 -90,000.00
4 -110,000.00 0.64 -69,906.99 -90,000.00
5 -110,000.00 0.57 -62,416.95 -90,000.00
6 -90,000.00
7 -90,000.00
-996,525.38

Mixer X Mixer Y
EAC -216,411.25 -208,624.89

We will select 'Mixer Y' because its EAC is lesser.

 Mixer Y
PV @ 11%pa DCF
1.00 -750,000.00
0.89 -80,357.14
0.80 -71,747.45
0.71 -64,060.22
0.64 -57,196.63
0.57 -51,068.42
0.51 -45,596.80
0.45 -40,711.43
-1,160,738.09
Sales in units 2000000
Sales Price per unit 2.5
Costs 0.7
Disc. Rate 10%
Tax Rate 34%
Sales Growth 7%
Costs Growth 5%

1 2 3
Sales 5000000 5350000 5724500
Costs 1400000 1470000 1543500
PBT 3600000 3880000 4181000
Tax 1224000 1319200 1421540
PAT 2376000 2560800 2759460

Growth Rate in Profits 7.78%

Sparkling Water Worth 106,920,000.00
Investment 3,200,000.00
Tax 34.00%
Price of Product 400.00
Labour Cost 15.00
Labour Cost growth 2.00%
Energy Cost 5.00
Energy Cost Growth 3.00%
Disc. Rate 8.00%

0.00 1.00 2.00 3.00 4.00

Cash Outlay 3,200,000.00

Sales 40,000,000.00 80,000,000.00 80,000,000.00 60,000,000.00

Labour Cost 30,000,000.00 30,600,000.00 31,200,000.00 31,800,000.00
Energy Cost 1,000,000.00 1,030,000.00 1,060,000.00 1,090,000.00
Depreciation 800,000.00 800,000.00 800,000.00 800,000.00
PBT 8,200,000.00 47,570,000.00 46,940,000.00 26,310,000.00
Tax 2,788,000.00 16,173,800.00 15,959,600.00 8,945,400.00
PAT 5,412,000.00 31,396,200.00 30,980,400.00 17,364,600.00
Operating Cash Flow -3,200,000.00 5,412,000.00 31,396,200.00 30,980,400.00 17,364,600.00
NPV $61,189,844.37
 Year 1 Year 2 Year 3
Physical production, in units 100,000.00 200,000.00 200,000.00
Labour inputs, in hours 2,000,000.00 2,000,000.00 2,000,000.00
Energy input, physical units 200,000.00 200,000.00 200,000.00
 Year 4
150,000.00
2,000,000.00
200,000.00
Tax Rate 34%
Disc. Rate 12%

Year 0 Year 1 Year 2 Year 3 Year 4

Investment 10000
Sales revenue 7000 7000 7000 7000
Operating costs 2000 2000 2000 2000
Depreciation 2500 2500 2500 2500
PBT 2500 2500 2500 2500
Tax 850 850 850 850
PAT 1650 1650 1650 1650
Cash Flows -10000 4150 4150 4150 4150
NPV ₹ 2,325.89