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    sandhu248
    This document contains two tables showing incremental earnings forecasts for 5 years. Table 1 shows sales remaining constant at $26,000 each year, with costs also remaining constant, resulting in stable EBIT and unlevered net income each year except for year 5 which shows a loss. Table 2 models a cannibalization effect, with sales reduced to $23,500, again with stable costs, but lower profits each year. It also includes inputs for production costs of a new product.

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    sandhu248
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    This document contains two tables showing incremental earnings forecasts for 5 years. Table 1 shows sales remaining constant at $26,000 each year, with costs also remaining constant, resulting in stable EBIT and unlevered net income each year except for year 5 which shows a loss. Table 2 models a cannibalization effect, with sales reduced to $23,500, again with stable costs, but lower profits each year. It also includes inputs for production costs of a new product.

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    This document contains two tables showing incremental earnings forecasts for 5 years. Table 1 shows sales remaining constant at $26,000 each year, with costs also remaining constant, resulting in stable EBIT and unlevered net income each year except for year 5 which shows a loss. Table 2 models a cannibalization effect, with sales reduced to $23,500, again with stable costs, but lower profits each year. It also includes inputs for production costs of a new product.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    15 views2 pages

    Home Net

    Uploaded by

    sandhu248
    This document contains two tables showing incremental earnings forecasts for 5 years. Table 1 shows sales remaining constant at $26,000 each year, with costs also remaining constant, resulting in stable EBIT and unlevered net income each year except for year 5 which shows a loss. Table 2 models a cannibalization effect, with sales reduced to $23,500, again with stable costs, but lower profits each year. It also includes inputs for production costs of a new product.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 2

    Table 1

    Incremental Earnings Forecast 0 1 2 3 4 5


    Sales 26000 26000 26000 26000
    COGS 11000 11000 11000 11000
    Gross profit 15000 15000 15000 15000
    Selleng exp,general & admin 2800 2800 2800 2800
    R&D 15000
    Depriciation 1500 1500 1500 1500 1500
    EBIT -15000 10700 10700 10700 10700 -1500
    Income tax @ 40% -6000 4280 4280 4280 4280 -600
    Unlevered net income -9000 6420 6420 6420 6420 -900
    Plus:Depreciation
    Cash flows
    Opportunity cost 1000 1000 1000 1000
    Net cash flows

    Table 2(Cannabilization)
    Incremental Earnings Forecast 0 1 2 3 4 5
    Sales 23500 23500 23500 23500
    COGS 9500 9500 9500 9500
    Gross profit 14000 14000 14000 14000
    Selleng exp,general & admin 3000 3000 3000 3000
    R&D 15000
    Depriciation 1500 1500 1500 1500 1500
    EBIT -15000 9500 9500 9500 9500 -1500
    Income tax @ 40% -6000 3800 3800 3800 3800 -600
    Unlevered net income -9000 5700 5700 5700 5700 -900
    Plus:Depreciation
    Cash flows
    Inputs
    Unit 1000
    sales 100000
    WP 260
    Production cost 110
    Selling Exp 2800000
    Design & engg. 5000000
    Software engg. 50
    Salary/engg. 200000
    Depreciation Straight line
    Lab equipment 7500000

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