Problem # 1

The Apex Manufacturing Company:

WACC 12% 24%

0 1 2 3 4
Investment 15000
Sales Revenue 7000 7500 8000 6000
Less: Operating cost 2000 2500 2800 2900
Less: Depreciation 2500 2500 2500 2500
Less: Opportunity 50 50 50 50
cost
EBT = 2450 2450 2650 550
Less: Tax @ 30%. 735 735 795 165
EAT= 1715 1715 1855 385
Cf w.c 50 50 -100 -200
CFs Stream 15000 1765 1765 1755 185
Value 4350
NPV 10650
NPV(WACC:(24%) 5470

200 250 300 200

NWC 0
Changes of NWC 50 50 -100 -200
Problem # 2
Alpha Corporation

Economic Life 10 Years

WACC 10%
TAX 20%

Investment 550000
Revenue 250000
Less :Expense 50000
Less Deprecation 55000
EBT = 145000
Less : Tax 20% 29000
EAT = 116000
ADD: Deprecation 55000
CFs Stream 550000 171000
Value = 155455
NPV = 394545

Acc:Deprecation 55000

Problem # 3
Apex Corporation

Equipment 600000
Installation cost 40000
economic Life 12 Years
Salvage Value 40000
Tax rate 30%
Discount rate 12%
ACC :Depreciation 50000

Investment 640000
Revenue 300000
Less:Oerratingh expence 25000
Less : Depreciation 50000
EBT = 225000
Less : Tax 30% 67500
EAT = 157500
ADD: Salvage value 40000
ADD :ACC: Deprecation 50000
Cfs Stream 640000 247500
Value = 220982
NPV= 419018

Problem # 4
IIB Corporation
Project 500000
Equipment 300000
economic Life 6
Tax rate 20%
Discount rate 10%
ACC :Depreciation 50000

Investment 300000
Revenue 200000
Less:Oerratingh expense 20000
Less : Depreciation 50000
EBT = 130000
Less : Tax 20% 26000
EAT = 104000
ADD : Deprecation 50000
Cfs Stream 300000 154000
Value = 140000
NPV= 160000

Problem # 5
Dhaka Corporation
Equipment 400000
Per year Production 10000 Units
Per Unit selling price 40 tk increasing 10% Every Years
Per Unit Production
20
Cost tk increasing 5% Every years
economic Life 5
Tax rate 30%
Discount rate 15%
ACC :Depreciation 80000

Details 1 2 3 3 5
Investment 400000
44000 48400 53240
Revenue 400000 0 0 0 585640
Less :Variable 21000 22050 23152
cost 200000 0 0 5 243101
Less
:Opportunity
cost 5000 5000 5000 5000 5000
Less
:Depreciation 80000 80000 80000 80000 80000
14500 17850 21587
EAT = 115000 0 0 5 257539
Less: Tax 30% 34500 43500 53550 64763 77262
10150 12495 15111
EBT = 80500 0 0 3 180277
ADD:
Depreciation 80000 80000 80000 80000 80000
18150 20495 23111
CFS Stream 400000 160500 0 0 3 260277
VALUE 673106
NPV -273106
Problem # 6

Argentina Ltd

WACC 12%
Scenario 0 1 2 3 4 5 6 VAlUE
Pessimistic 500,0 50000 50000 5000 1000 10000 15000
00 0 00 0 0 316381
Expected 500,0 15000 15000 2500 2500 35000 40000
00 0 0 00 00 0 0 991584
Optimistic 500,0 25000 25000 3500 3500 40000 45000 134902
00 0 0 00 00 0 0 2

State of Economy Probability NPV

WV
Pessimistic
25% 183619 45905
Expected
50% -491584 -245792
Optimistic
25% -849022 -212255

ENPV 100% -412143

Problem # 7
North Bengal Agro Processing Corporation

Economic Life 6 Years

Equipment 625000
Expense 25000 11%Increasing are every years
10% increasing are every
Revenue 300000 year
Salvage value 25000
Discount Rate 11%
Tax rate 28%
ACC:Depreciation 100000

2073 2986
NWC 10000 12000 14400 17280 6 24883 0
1488
Change in WC 2000 2400 2880 3456 4147 3
20 % increase in five years and last years recover working
capital

1 2 3 4 5 6
62500
investment 0
30000 36300 39930
Revenue 0 0 0 439230 483153 531468
Less : Expense 25000 27750 30525 33883 37610 41747
Less:Depreciat 10000 10000 10000
oin 0 0 0 100000 100000 100000
17500 23525 26877
EAT= 0 0 5 305347 345543 389721
Less :Tax 28% 49000 65870 75257 85497 96752 109122
12600 16938 19351
EBT: 0 0 8 219850 248791 280599
ADD: 10000 10000 10000
depreciation 0 0 0 100000 100000 100000
NWC 2000 24000 2880 3456 4147 14883
Salvage Value 25000
63500 22800 29338 29639
Cfs Stream 0 0 0 8 323306 352938 395482
12941
Value 07
65910
7
NPV

0 1 2 3 4 5 6
62500 2280 2933 29639 3233 3529 3954
expected 0 00 80 8 06 38 82
12941
VALUE 07
65910
NPV 7
pessimist decreased 1482 1906 19265 2101 2294 2570
ic 35% 00 97 9 49 10 63
value 790891
NPV -165891
Increased 45% 3306 4254 42977 4687 5117 5734
optimistic 00 01 7 94 60 49
VALUE 1764296
NPV -1139296

probability NPV WV
expected 50% 659107 329554
pessimistic 20% -165891 -33178
optimistic 30% -1139296 -341789
ENPV 100% -45413

Problem # 8
Consider the information of problem #7

1 2 3 4 5 6
investment 625000
43923 53146
Revenue 300000 363000 399300 0 483153 8
Less : Expense 25000 27750 30525 33883 37610 41747
Less:Depreciatoi 10000 10000
n 100000 100000 100000 0 100000 0
30534 38972
EAT= 175000 235250 268775 7 345543 1
12213 15588
Less :Tax 40% 70000 94100 107510 9 138217 8
18320 23383
EBT: 105000 141150 161265 8 207326 3
ADD: 10000 10000
depreciation 100000 100000 100000 0 100000 0
NWC 2000 24000 2880 3456 4147 14883
Salvage Value 25000
28666 34871
Cfs Stream 625000 207000 265150 264145 4 311473 6
115494
Value 5
-
NPV 529945

Problem # 9

The Apex Manufacturing Company

1 2 3 4

Investment 10000
Revenue 7000 8000 9000 7000
Less: Operating cost 2000 2200 2400 2600
Less:Dep :Exp 2500 2500 2500 2500
Less: opportunity cost 50 50 50 50
Add: EPS 6000 900 900 900 900
EBT: 3350 4150 4950 2750
Less: Tax Rate 30% 1005 1245 1485 825
EAT: 2345 2905 3465 1925
Less :Interest rate 9% 4000 360 360 360 360

Cfs Stream 1985 2545 3105 1565

value 10000