Sheet1

0% inflation for all; end bk val = 0; WC inv(t) = depends on Sales(t+1) assumptions for next yr sales investme
Hola Kola
Amounts in peso 000's except if otherwise specified
Year 360 days
k 18.20% WACC; nominal
Tax 30%
Sales Volume 600,000 litre/month
Unit price 5 litre
Capex 50,000
Ann Deprecn 20% Straight Line
Salvage value 4,000
Ending bk value -
Rental (Op Cost) 60 annual
Inventory 1 month
Receivables 45 days
Payables 36 days
Raw materials 1.8 Peso/litre
Labour 180 month
Energy 50 month
General, Admin & Selling 300 annual
Overhead 1% Sales
Erosion 800 annual

Income Statement [For capital budgeting]

Year 0 1 2
Ann sales volume (liters) 7,200,000 7,200,000
Unit price 5.00 5.00
Sales 36,000 36,000
Raw material consumption 12,960 12,960
Labour 2,160 2,160
Energy 600 600
General, Admin & Selling 300 300
Overhead 360 360
Rental (opp cost) 60 60
Depreciation 10,000 10,000
Profit before tax 33,240 20,280
Tax 9,972 6,084
Profit after tax 23,268 14,196
Operating cash flow 33,268 24,196
Year 0 1 2
Net Working Capital
Inventory 1,080 1,080 1,080
Receivables 4,500 4,500 4,500
Payables 1,296 1,296 1,296
NWC 4,284 4,284 4,284
Equipment
Op book value 50,000 40,000
Depreciation 10,000 10,000

Page 1
 Sheet1

Cl book value 40,000 30,000

Free Cash Flow

Equipment (50,000) - -
∆ Net Working Capital (4,284) - -
Operating cash flow 33,268 24,196
Erosion (800) (800)
Free Cash Flow - 33,268 24,196
PV - 28,146 17,318
NPV (1,741)
NPV: Check 82,999 we shld not launch the new prod

Page 2
 Sheet1

umptions for next yr sales investments in working capital to be done in this yr

ACC; nominal discount factor

Year 1 0% Volume increase: Year 2-5
Year 1 0% Annual inflation: Year 2-5
Year 0
Year 1-5
Year 5 at the end of year 5
Assume
Year 1-5
Year 1-5
Year 1-5 receivables period
Year 1-5
Year 1-5 0% Annual Inflation: Year 2-5
Year 1 0% Annual Inflation: Year 2-5
Year 1 0% Annual Inflation: Year 2-5
Year 1-5
Year 1-5
Year 1-5 [After tax cash flow]

3 4 5
7,200,000 7,200,000 7,200,000 600000*12 sales volume multiplied by no. of months
5.00 5.00 5.00
36,000 36,000 36,000 sales vol* unitprice = 7200000*5 /1000
12,960 12,960 12,960 1.8 * volume
2,160 2,160 2,160 180000*12/1000 labour cost ler month * 1
600 600 600
300 300 300
360 360 360
60 60 60 consider ilook at it such that we have been receiving
10,000 10,000 10,000 why dont r50 mil /5 /1000
20,280 20,280 20,280
6,084 6,084 6,084 30 % of profit
14,196 14,196 14,196
24,196 24,196 24,196
3 4 5
1,080 1,080 inventory for 1 month 12960*30/360
4,500 4,500 36000/360*45 45 days receivble period
1,296 1,296 same as receivbles
4,284 4,284 inventory +receivables-payables

30,000 20,000 10,000

10,000 10,000 10,000

Page 3
 Sheet1

20,000 10,000 -

- - 2,800
- - 4,284
24,196 24,196 24,196
(800) (800) (800)
24,196 24,196 24,196
14,652 12,396 10,487
e shld not launch the new product

cost of market study - sunk cost hence not considered

Page 4
 Sheet1

ltiplied by no. of months

e = 7200000*5 /1000
abour cost ler month * 12

t we have been receiving rent and by building the factory we r forgoing the income (which was faxabme he

Page 5
Sheet1

Page 6
 Sheet1

e income (which was faxabme hence subraact b4 tax)

Page 7
 Sheet2

0% inflation for all; end bk val = 4 million; WC inv(t) = depends on Sales(t+1)

Hola Kola
Amounts in peso 000's except if otherwise specified
Year 360 days
k 18.20% WACC; nominal
Tax 30%
Sales Volume 600,000 litre/month Year 1
Unit price 5 litre Year 1
Capex 50,000 Year 0
Ann Deprecn 20% Straight Line Year 1-5
Salvage value 4,000 Year 5
Ending bk value 4,000
Rental 60 annual Year 1-5
Inventory 1 month Year 1-5
Receivables 45 days Year 1-5
Payables 36 days Year 1-5
Raw materials 1.8 Peso/litre Year 1-5
Labour 180 month Year 1
Energy 50 month Year 1
General, Admin & Selling 300 annual Year 1-5
Overhead 1% Sales Year 1-5
Erosion 800 annual Year 1-5

Income Statement [For capital budgeting]

Year 0 1 2 3
Ann sales volume (liters) 7,200,000 7,200,000 7,200,000
Unit price 5.00 5.00 5.00
Sales 36,000 36,000 36,000
Raw material consumption 12,960 12,960 12,960
Labour 2,160 2,160 2,160
Energy 600 600 600
General, Admin & Selling 300 300 300
Overhead 360 360 360
Rental (opp cost) 60 60 60
Depreciation 9,200 9,200 9,200
Profit before tax 33,240 20,280 20,280
Tax 9,972 6,084 6,084
Profit after tax 23,268 14,196 14,196
Operating cash flow 32,468 23,396 23,396
Year 0 1 2 3
Net Working Capital
Inventory 1,080 1,080 1,080 1,080
Receivables 4,500 4,500 4,500 4,500
Payables 1,296 1,296 1,296 1,296
NWC 4,284 4,284 4,284 4,284
Equipment
Op book value 50,000 40,800 31,600
Depreciation 9,200 9,200 9,200

Page 8
 Sheet2

Cl book value 40,800 31,600 22,400

Free Cash Flow

Equipment (50,000) - - -
∆ Net Working Capital (4,284) - - -
Operating cash flow 32,468 23,396 23,396
Erosion (800) (800) (800)
Free Cash Flow - 32,468 23,396 23,396
PV - 27,469 16,746 14,167
NPV (2,488)
NPV: Check 80,508

Page 9
 Sheet2

0% Volume increase: Year 2-5

0% Annual inflation: Year 2-5

Assume this is the only change

0% Annual Inflation: Year 2-5

0% Annual Inflation: Year 2-5
0% Annual Inflation: Year 2-5

[After tax cash flow]

4 5
7,200,000 7,200,000
5.00 5.00
36,000 36,000
12,960 12,960
2,160 2,160
600 600
300 300
360 360
60 60
9,200 9,200 bcoz of ending bk value deprcn changes (50000-4000)/5
20,280 20,280
6,084 6,084
14,196 14,196
23,396 23,396
4 5
1,080
4,500
1,296
4,284

22,400 13,200
9,200 9,200

Page 10
 Sheet2

13,200 4,000

- 2,800
- 4,284
23,396 23,396
(800) (800)
23,396 23,396
11,986 10,140

Page 11
 Sheet2

(50000-4000)/5

Page 12
 Sheet3

0% inflation for all; end bk val = 0 million; WC inv(t) = depends on Sales(t)change from sheet 2
Hola Kola
Amounts in peso 000's except if otherwise specified
Year 360 days
k 18.20% WACC; nominal
Tax 30%
Sales Volume 600,000 litre/month Year 1
Unit price 5 litre Year 1
Capex 50,000 Year 0
Ann Deprecn 20% Straight Line Year 1-5
Salvage value 4,000 Year 5
Ending bk value -
Rental 60 annual Year 1-5
Inventory 1 month Year 1-5
Receivables 45 days Year 1-5
Payables 36 days Year 1-5
Raw materials 1.8 Peso/litre Year 1-5
Labour 180 month Year 1
Energy 50 month Year 1
General, Admin & Selling 300 annual Year 1-5
Overhead 1% Sales Year 1-5
Erosion 800 annual Year 1-5

Income Statement [For capital budgeting]

Year 0 1 2 3
Ann sales volume (liters) 7,200,000 7,200,000 7,200,000
Unit price 5.00 5.00 5.00
Sales 36,000 36,000 36,000
Raw material consumption 12,960 12,960 12,960
Labour 2,160 2,160 2,160
Energy 600 600 600
General, Admin & Selling 300 300 300
Overhead 360 360 360
Rental (opp cost) 60 60 60
Depreciation 10,000 10,000 10,000
Profit before tax 33,240 20,280 20,280
Tax 9,972 6,084 6,084
Profit after tax 23,268 14,196 14,196
Operating cash flow 33,268 24,196 24,196
Year 0 1 2 3
Net Working Capital
Inventory 1,080 1,080 1,080
Receivables 4,500 4,500 4,500
Payables 1,296 1,296 1,296
NWC 4,284 4,284 4,284
Equipment
Op book value 50,000 40,000 30,000
Depreciation 10,000 10,000 10,000

Page 13
 Sheet3

Cl book value 40,000 30,000 20,000

Free Cash Flow

Equipment (50,000) - - -
∆ Net Working Capital (4,284) - -
Operating cash flow 33,268 24,196 24,196
Erosion (800) (800) (800)
Free Cash Flow - 33,268 24,196 24,196
PV - 28,146 17,318 14,652
NPV (1,367)
NPV: Check 82,999

Page 14
 Sheet3

nge from sheet 2

0% Volume increase: Year 2-5

0% Annual inflation: Year 2-5

Given
Assume

0% Annual Inflation: Year 2-5

0% Annual Inflation: Year 2-5
0% Annual Inflation: Year 2-5

[After tax cash flow]

4 5
7,200,000 7,200,000
5.00 5.00
36,000 36,000
12,960 12,960
2,160 2,160
600 600
300 300
360 360
60 60 16,440
10,000 10,000
20,280 20,280
6,084 6,084
14,196 14,196
24,196 24,196
4 5 6
1,080 1,080
4,500 4,500
1,296 1,296
4,284 4,284

20,000 10,000
10,000 10,000

Page 15
 Sheet3

10,000 -

- 2,800 50000 only needed in yr 0 wc comes only in yr 1 bcoz of c

- 4,284
24,196 24,196
(800) (800)
24,196 24,196 -
12,396 10,487 -

Page 16
 Sheet3

comes only in yr 1 bcoz of change in assumption

Page 17