Documentos de Académico
Documentos de Profesional
Documentos de Cultura
Step 1
Initial Capital
Investment
$ (1,300,000.00)
Step 2
Initial Working
Capital Investment
Step 3
Cost of Capital
Tax Rate
$ (1,200,000.00)
After Tax Operating Income
15%
25%
$ 1,331,319.50
Year
Sales
% change in sales
Sales growth(Inflation adjusted)
Advertising
2,958,487.78
1,242,564.87
0.30
0.42
185,502.00
1,400,930.98
0.11
0.13
166,951.80
Employees Salaries
55,680.00
55,680.00
Rent
66,995.52
66,995.52
50,000.00
52,500.00
831,887.35
623,915.51
52,500.00
1,058,803.66
794,102.74
0.870
542535.2267
0.756
600455.7608
Party
Utlity Exp
S-C
(S-C)(1-T)
PVIF (Present value interest factor)
PV of each item
PV of Operating Income
2,958,487.78
2,218,865.84
4,175,324.51
Step 4
Year
NWC Requirement
Change in NWC
$1,200,000.00
$1,704,000.00
$1,921,176.47
-$504,000.00
-$217,176.47
(Negative Sign signifies that there is a cash outflow. If NWC increases the
PV of each item
PV of NWC change
Step 5
Year
-$438,260.87
-$164,216.61
(652,711.77)
Salvage
PV of Salvage
Step 6
Year
6,179.62
616,426.08
Step 7
20%
25%
Step 8
= {(C*d*T}/(d + k )}{(1+0.5k)/(1+k)}
Where, C is the initial capital investment
Decision
173,602.48
$1,817,938.11
1.727
Note: This approach is easier and time saving. But we don't know the project cash flow each year.
Initial Capital
Investment
-1300000
Step 2
Initial Working
Capital Investment
-1200000
Step 3
CCA Rate
Tax Rate
CCA calculation
Year
1
2
3
4
5
6
7
8
9
10
$
$
$
$
$
$
$
$
$
$
Beginning
UCC
1,200,000.00
1,080,000.00
864,000.00
691,200.00
552,960.00
442,368.00
353,894.40
283,115.52
226,492.42
181,193.93
CCA
$
$
$
$
$
$
$
$
$
$
120,000.00 $
216,000.00 $
172,800.00 $
138,240.00 $
110,592.00 $
88,473.60 $
70,778.88 $
56,623.10 $
45,298.48 $
36,238.79 $
Ending
UCC
1,080,000.00
864,000.00
691,200.00
552,960.00
442,368.00
353,894.40
283,115.52
226,492.42
181,193.93
144,955.15
Step 4
Year
NWC Requirement
Change in NWC
Step 5
1200000
1704000
1921176.471
-504000
-217176.4706
(Negative Sign signifies that there is a cash outflow. If NWC increases the
Project Operating Cash Flow Calculation
Cost of Capital
15%
Year
Sales
V Cost
F Cost
S-C
D (= CCA)
1242564.868
185502
0
1057062.868
120000
1400930.978
166951.8
0
1233979.178
216000
S-C-D
(S-C-D)*(1-T)
937062.8676
702797.1507
1017979.178
763484.3836
(S-C-D)*(1-T) + D
822797.1507
979484.3836
-504000
822797.1507
-217176.4706
979484.3836
Step 6
Year
Initial Investment
Initial net working capital
Change in NWC
Operating Cash Flow {(S-C-D)(1-T)+D}
Working capital release
0
-1300000
-1200000
Salvage value
Cash Flow
-2500000
318797.1507
762307.913
PVIF
Discounted Cash Flow
1
-2500000
0.869565217
277214.9137
0.756143667
576414.301
1979919.191
PV of Cash Flow
Step 7
{(UCC - Sn)*d*T}/(d + k ) =
Where,
10577.25
Decision
32356.05943
1990496.44
Note: This approach is more intuitive and we see the project cash flow each year. But it is more time consuming.
Sales
$ 2,958,487.78
$ 1,242,564.87
Rent
66995.52
1,579,481.00
0.11
0.13
150,256.62
1,548,510.79
-0.02
-0.02
135,230.96
1,518,147.83
-0.02
-0.02
121,707.86
1,488,380.23
-0.02
-0.02
121,707.86
1,459,196.30
-0.02
-0.02
121,707.86
1,430,584.61
-0.02
-0.02
121,707.86
55,680.00
55,680.00
55,680.00
55,680.00
55,680.00
55,680.00
66,995.52
66,995.52
66,995.52
66,995.52
66,995.52
66,995.52
52,500.00
1,254,048.86
940,536.65
52,500.00
1,238,104.31
928,578.23
52,500.00
1,221,264.45
915,948.34
52,500.00
1,191,496.85
893,622.63
52,500.00
1,162,312.92
871,734.69
52,500.00
1,133,701.23
850,275.92
0.658
0.572
618418.1137 530917.6187
0.497
455388.2042
0.432
386337.7251
0.376
327717.3588
0.327
277956.7067
$2,041,100.61
$40,822.01
$2,001,079.03 $1,961,842.18
$40,021.58
$39,236.84
-$160,996.68
$24,283.06
$20,701.67
$17,648.48
$15,045.59
$12,826.59
tal investment
R = - {(Sn*d*T}/(d + k )}{1/(1+k)^n}
20%
25%
2041100.609
40822.01218
2001079.029
40021.58057
1961842.185
39236.8437
1579481.005 1548510.789
150256.62
135230.958
0
0
1429224.385 1413279.831
172800
138240
1518147.832
121707.8622
0
1396439.97
110592
1488380.228
121707.8622
0
1366672.366
88473.6
1459196.302
121707.8622
0
1337488.44
70778.88
1430584.61
121707.8622
0
1308876.747
56623.104
1256424.385 1275039.831
942318.2886 956279.8733
1285847.97
964385.9776
1278198.766
958649.0742
1266709.56
950032.1697
1252253.643
939190.2325
1115118.289 1094519.873
1074977.978
1047122.674
1020811.05
995813.3365
-244855.8247
1115118.289
42471.22148
1094519.873
41638.45243
1074977.978
40822.01218
1047122.674
40021.58057
1020811.05
39236.8437
995813.3365
1961842.185
0
870262.4639
1136991.095
1116616.43
1087944.686
1060832.63
2996892.365
0.657516232
572211.6965
0.571753246
650078.3486
0.497176735
555155.7113
0.432327596
470348.5108
0.37593704
398806.2789
0.326901774
979689.4302
shield adjustment
Data
Starting Year
Current Sales - 1996
Yorkvilles sales
1st sales increas
2-4 yrs sales increase
Full-time wage$/hr
additional Full Time
Part-time wage$/hr
Additional part time employees
Yorkville increas sq. footage
Yorkville hours of ops/week
weeks/yr
store close for _____ days
9
10
1,402,533.93
-0.02
-0.02
121,707.86
1,375,033.27
-0.02
-0.02
121,707.86
1996
5100841
58%
45%
15%
12
2
10
1
1875
87
52
5
55,680.00
55,680.00
66,995.52
66,995.52
52,500.00
1,105,650.55
829,237.91
52,500.00
1,078,149.88
808,612.41
0.284
235721.1689
0.247
199876.6216
10
$1,923,374.69 $1,885,661.46
$38,467.49
$37,713.23
$10,934.86
$9,322.13
10
$25,000.00
10
$1,885,661.46
Investmesnts
Contingency
Furnitute
Ttl Investments
F&F useful life
St. line depreciation/yr
Salvage Value
Working Capital
Gross Margin
Inventory Days of COGS
Decrease in days
New inventory days
$ 100,000.00
$ 1,200,000.00
$ 1,300,000.00
$
10.00
$ 117,500.00
$
25,000.00
46.50%
118
20
98
Costs
Electricity (per sq. ft) per month
Gas (per sq. ft) per month
Water (per sq. ft.) per month
Rent increase (on overall rent)
Current Rent
Annual maintenance (option 1)
Annual maintenance (option 2)
Annual maintenance is tax deductible
Advertising expense (current)
Advertising 1st year increase
Adv. Decrease in subsequent yrs
Gran Opening
Inflation
CCA: Furniture & Fixture
Discount Rate
Tax rate
1
0.25
0.5
38%
176304
117500
= CCA
185502
100%
10% up to year 6
$50,000.00
2%
20%
25%
yorkville
ft
pt
weekdays
weekends
hrs/week
hrs/year
cost
other (x2)
12
10
13 hrs
11 hrs
87
4524
$ 597,168.00
2 fulltime
hrs yearly
cost
80hrs/week
3840
108576
1 part time
hrs yearly
cost
20hrs/week
960
45240
total cost
153816
4
2
8
weekdays
11 hrs
132
6864
$ 1,208,064.00
ttl cost
$ 1,805,232.00