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    Projected Operating Costs, Manual Process: Inflatio Mexico 7% Tax Rate 35%

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    Cesar Camey
    The document projects the costs and cash flows of transitioning from a manual to an automatic production process in Mexico between 2008-2018. Key details include: - Operating costs are projected to decrease with the automatic equipment, saving over $700,000 in the first year. - After taxes, the net present value of the cash flows in pesos is estimated at nearly $1.5 million using a 12.19% discount rate. - Converting to euros at current exchange rates, the net present value is estimated at around €92,495 using an 8% discount rate. - A loan is required to fund the $3.3 million capital expenditure for the new equipment; the projected cash

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    Projected Operating Costs, Manual Process: Inflatio Mexico 7% Tax Rate 35%

    Uploaded by

    Cesar Camey
    645 views4 pages
    The document projects the costs and cash flows of transitioning from a manual to an automatic production process in Mexico between 2008-2018. Key details include: - Operating costs are projected to decrease with the automatic equipment, saving over $700,000 in the first year. - After taxes, the net present value of the cash flows in pesos is estimated at nearly $1.5 million using a 12.19% discount rate. - Converting to euros at current exchange rates, the net present value is estimated at around €92,495 using an 8% discount rate. - A loan is required to fund the $3.3 million capital expenditure for the new equipment; the projected cash

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    Groupe Ariel.xlsx

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    The document projects the costs and cash flows of transitioning from a manual to an automatic production process in Mexico between 2008-2018. Key details include: - Operating costs are projected to decrease with the automatic equipment, saving over $700,000 in the first year. - After taxes, the net present value of the cash flows in pesos is estimated at nearly $1.5 million using a 12.19% discount rate. - Converting to euros at current exchange rates, the net present value is estimated at around €92,495 using an 8% discount rate. - A loan is required to fund the $3.3 million capital expenditure for the new equipment; the projected cash

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    645 views4 pages

    Projected Operating Costs, Manual Process: Inflatio Mexico 7% Tax Rate 35%

    Uploaded by

    Cesar Camey
    The document projects the costs and cash flows of transitioning from a manual to an automatic production process in Mexico between 2008-2018. Key details include: - Operating costs are projected to decrease with the automatic equipment, saving over $700,000 in the first year. - After taxes, the net present value of the cash flows in pesos is estimated at nearly $1.5 million using a 12.19% discount rate. - Converting to euros at current exchange rates, the net present value is estimated at around €92,495 using an 8% discount rate. - A loan is required to fund the $3.3 million capital expenditure for the new equipment; the projected cash

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 4

    Inflatio Mexico 7%

    Tax rate 35%

    2008 2009 2010 2011 2012


    Projected Operating Costs, Manual Process
    Unit volume (000s) 496 546 600 660
    Materials 564,816 664,788 782,456 920,951
    Direct Labor 1,115,184 1,312,572 1,544,897 1,818,343
    Overhead 1,680,000 1,797,600 1,923,432 2,058,072
    Total 3,360,000 3,774,960 4,250,785 4,797,366
    Materials/unit 1.1387 1.2185 1.3037 1.395
    Direct labor/unit 2.2484 2.4057 2.5741 2.7543

    Projected Operating Costs, New Automatic Equipment


    Unit volume (000s) 496 546 600 660
    Materials 542,223 638,197 751,158 884,113
    Direct Labor 524,136 616,909 726,101 854,621
    Overhead 1,566,211 1,675,846 1,793,155 1,918,676
    Total 2,632,570 2,930,952 3,270,414 3,657,410
    Materials/unit 1.0932 1.1697 1.2516 1.3392
    Direct labor/ unit 1.0567 1.1307 1.2098 1.2945

    Cash Flow (MXN)


    (+) Cost Savings 727,430 844,008 980,371 1,139,956
    (-) Tax on savings 254,601 295,403 343,130 398,985
    (+) Sell old machine 175,000
    Book Value old mach 250,000
    Booked loss on asset sale 75,000
    (-) Loss f depreciation of old machine (29,167) (29,167) (29,167)
    (+) Tax shield from write off 26,250
    (-) Purchase new mach 3,500,000
    Depreciation 350,000 350,000 350,000 350,000
    (+) Tax shield from dep. 122,500 122,500 122,500 122,500
    (+) Savage value
    Total Cash flow (3,298,750) 566,163 641,938 730,574 863,471
    NPV @ Pesos @12.19% 1,478,997
    a) Convert in Euros @15.99MXN/E 92,495

    Wacc in Euros 8.00%


    Wacc in pesos 12.19% With Fisher effect adjusment

    Euros CF's -$206,301 $34,084 $37,201 $40,755 $46,367


    b) NPV in Euros @8% $92,495
    NPV in pesos $1,478,997

    Inflation Mexico 7% 7% 7% 7% 7%
    Inflation Euro 3% 3% 3% 3% 3%
    PPP MXN/Euro $15.99 $16.61 $17.26 $17.93 $18.62

    Gov rate I rate Mexico 9.12% 9.12% 9.12% 9.12% 9.12%


    Gov rate I rate France 4.81% 4.81% 4.81% 4.81% 4.81%
    I Rat MXN/Euro $15.99 $16.65 $17.33 $18.04 $18.79

    ExperMXN/Euro $15.99 $20.00 $20.00 $20.00 $25.00

    c) Adjust by inflation
    (3,298,750) 566,162 621,430 683,820 783,440
    NPV in pesos 869,715

    Loan
    Capex 3,298,750
    Sedn to france 869,715 Max int rate
    4,168,465 12.19%

    Balance 4,168,465 4,168,465 4,110,613 3,990,438 3,793,219


    Interest 508,310 501,255 486,601 462,552
    Principal 57,852 120,175 197,219 320,888
    Balance 4,168,465 4,110,613 3,990,438 3,793,219 3,472,331
    2013 2014 2015 2016 2017 2018 CAGR

    660 660 660 660 660 660


    985,417 1,054,396 1,128,204 1,207,178 1,291,681 1,382,099
    1,945,627 2,081,821 2,227,549 2,383,477 2,550,321 2,728,843
    2,202,137 2,356,287 2,521,227 2,697,713 2,886,553 3,088,611
    5,133,181 5,492,504 5,876,980 6,288,368 6,728,555 7,199,553
    1.4927 1.5971 1.7089 1.8286 1.9566 2.0935
    2.9471 3.1534 3.3742 3.6104 3.8631 4.1335

    660 660 660 660 660 660


    946,001 1,012,221 1,083,076 1,158,891 1,240,014 1,326,815
    914,445 978,456 1,046,948 1,120,234 1,198,651 1,282,556
    2,052,983 2,196,692 2,350,460 2,514,993 2,691,042 2,879,415
    3,913,429 4,187,369 4,480,484 4,794,118 5,129,707 5,488,786
    1.433 1.5333 1.6406 1.7554 1.8783 2.0098
    1.3852 1.4821 1.5859 1.6969 1.8157 1.9427

    1,219,752 1,305,135 1,396,496 1,494,250 1,598,848 1,710,767 10.0%


    426,913 456,797 488,774 522,988 559,597 598,768

    350,000 350,000 350,000 350,000 350,000


    350,000
    122,500 122,500 122,500 122,500 122,500
    122,500
    0
    915,339 970,838 1,030,222 1,093,763 1,161,751 1,234,499

    $47,315 $48,308 $49,347 $50,432 $51,564 $52,744


    7% 7% 7% 7% 7% 7%
    3% 3% 3% 3% 3% 3%
    $19.35 $20.10 $20.88 $21.69 $22.53 $23.41

    9.12% 9.12% 9.12% 9.12% 9.12% 9.12%


    4.81% 4.81% 4.81% 4.81% 4.81% 4.81%
    $19.56 $20.36 $21.20 $22.07 $22.98 $23.93

    $25.00 $25.00 $25.00 $25.00 $25.00 $25.00

    915,339 970,838 1,030,222 866,394 888,710 911,697

    3,472,331 2,980,414 2,373,014 1,632,161 964,795 193,734


    423,422 363,437 289,369 199,029 117,649 23,624
    491,917 607,401 740,853 667,365 771,061 888,073
    2,980,414 2,373,014 1,632,161 964,795 193,734 (694,339)

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