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Finance Case Study

The document is an assessment form for a corporate financial management course group project. It lists the course, assessment method, semester, lecturer, date, class, topic, and seven student members. The group project topic is capital budgeting decision.

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Kelvin Charles
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290 views4 pages

Finance Case Study

The document is an assessment form for a corporate financial management course group project. It lists the course, assessment method, semester, lecturer, date, class, topic, and seven student members. The group project topic is capital budgeting decision.

Uploaded by

Kelvin Charles
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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ASSESMENT FORM

COURSE : CORPORATE FINANCIAL MANAGEMENT

METHOD OF ASSESSMENT : GROUP PROJECT REPORT

SEMESTER/ACADEMIC YEAR : 3 / 2018-2022

NAME OF LECTURER : SHINTA AMALINA HEZRATI HAVIDZ, S.E,. MBA, PH.D

DATE : JANUARI 2020

CLASS : LG53

TOPIC : CAPITAL BUDGETING DECISION

MEMBER :

1. JESSICA STEVANIE / 2201765564


2. KELLY CHARLES / 2201828335
3. MICHELLIN ALICIA / 2201757276
4. CHERSI MAYORI / 2201760485
5. DRAVEN DAVIDSON / 2201775461
6. SULTHAN RAFI / 2201767390
7. JEIHAN SEKAR / 2201787322

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Case 3

Jawaban :

Year 1 = (74,000 × $360) – (15,000 × $290) – [(80,000 – 15,000) × ($290 – 255)] = $20,015,000

Year 2 = (95,000 × $360) – (15,000 × $290) – [(60,000 – 15,000) × ($290 – 255)] = $28,275,000

Sales Year 1 Year 2 Year 3 Year 4 Year 5


New $26,640,000 $20,015,000 $45,000,000 $37,800,000 $28,800,000
Lost Sales –4,350,000 –4,350,000
Lost Revenue –2,275,000 –1,575,000
Net Sales $20,015,000 $28,275,000 $45,000,000 $37,800,000 $28,800,000

VC
New $11,470,000 $14,725,000 $19,375,000 $16,275,000 $12,400,000
Lost sales –1,800,000 –1,800,000
$9,670,000 $12,925,000 $19,375,000 $16,275,000 $12,400,000

Sales $20,015,000 $28,275,000 $45,000,000 $37,800,000 $28,800,000


VC 9,670,000 12,925,000 19,375,000 16,275,000 12,400,000
Fixed costs 4,700,000 4,700,000 4,700,000 4,700,000 4,700,000
Depreciation 3,072,350 5,265,350 3,760,350 2,685,350 1,919,950
EBT $2,572,650 $5,384,650 $17,164,650 $14,139,650 $9,780,050
Tax 900,428 1,884,628 6,007,628 4,948,878 3,423,018
NI $1,672,223 $3,500,023 $11,157,023 $9,190,773 $6,357,033
+Depreciation 3,072,350 5,265,350 3,760,350 2,685,350 1,919,950
OCF $4,744,573 $8,765,373 $14,917,373 $11,876,123 $8,276,983

NWC
Beg $0 $4,003,000 $5,655,000 $9,000,000 $7,560,000
End 4,003,000 5,655,000 9,000,000 7,560,000 0
NWC CF -$4,003,000 –$1,652,000 –$3,345,000 $1,440,000 $7,560,000
Net CF $741,573 $7,113,373 $11,572,373 $13,316,123 $15,836,983

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BV of equipment = ($21,500,000 – 3,072,500 – 5,265,350 – 3,760,350 – 2,685,350 – 1,919,950)

BV of equipment = $4,796,650

Taxes on sale of equipment = (BV – MV)(tC) = (4,796,650 – 4,100,000)(.35) = $243,828

CF on sale of equipment = $4,100,000 + 243,828 = $4,343,828

So, the cash flows of the project are:

Time Cash flow

0 –$21,500,000
1 741,573
2 7,113,373
3 11,572,373
4 13,316,123
5 20,180,810

1. What is the payback period of the project?

The payback period is:

Payback period = 3 + ($2,072,683 / $13,316,123)

Payback period = 3.156 years

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2. What is the profitability index of the project?

The profitability index is:

Profitability index = [($741,573 / 1.12) + ($7,113,373 / 1.12 2) + ($11,572,373 / 1.123) +


($13,316,123 / 1.124) + ($20,180,810 / 1.125)] / $21,500,000

Profitability index = 1.604

3. What is the IRR of the project?

The project IRR is:

IRR: –$21,500,000 = $741,573 / (1 + IRR) + $7,113,373 / (1 + IRR) 2 + $11,572,373 / (1


+ IRR)3 + $13,316,123 / (1 + IRR)4 + $20,180,810 / (1 + IRR)5

IRR = 27.62%

4. What is the NPV of the project?

The project NPV is:

NPV = –$21,500,000 + ($741,573 / 1.12) + ($7,113,373 / 1.12 2) + ($11,572,373 / 1.123)


+ ($13,316,123 / 1.124) + ($20,180,810 / 1.125)

NPV = $12,983,611.62

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