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Solution Capital Budgeting Assignment

1. The documents provide cash flow projections over 5 years that include annual cash inflows, depreciation amounts, taxable income after depreciation and taxes, net income after taxes, and accumulated cash flows. 2. NPV is calculated using different discount rates to determine the profitability of the project based on the projected cash flows. 3. Sensitivities are shown by varying the depreciation rate and additional capital expenditures to analyze their impact on the cash flows and NPV.

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Aryaman
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94 views8 pages

Solution Capital Budgeting Assignment

1. The documents provide cash flow projections over 5 years that include annual cash inflows, depreciation amounts, taxable income after depreciation and taxes, net income after taxes, and accumulated cash flows. 2. NPV is calculated using different discount rates to determine the profitability of the project based on the projected cash flows. 3. Sensitivities are shown by varying the depreciation rate and additional capital expenditures to analyze their impact on the cash flows and NPV.

Uploaded by

Aryaman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Solution 1(1)

Cash WDV Depreciation@20% CI after Dep Tax CI after Dep CI after Tax
Inflow & Tax before Dep
before
dep and
Tax

1 350000 1100000 220000 130000 45500 84500 304500


2 350000 880000 176000 174000 60900 113100 289100
3 350000 704000 140800 209200 73220 135980 276780
4 350000 563200 112640 237360 83076 154284 266924
5 350000 450560 350000 122500 227500 227500
Salvage Value 150000
Working Capital 50000
STCL 105196
PV of Cash Inflows
Cash out flows
NPV

Solution 1(3)
Cash WDV Depreciation@15% CI after Dep Tax@35% CI after Dep CI after Tax
Inflow & Tax before Dep
before
dep and
Tax

1 397500 1200000 180000 217500 76125 141375 321375


2 397500 1020000 153000 244500 85575 158925 311925
3 397500 867000 130050 267450 93607.5 173842.5 303893
4 397500 736950 110543 286957.5 100435.13 186522.375 297065
5 397500 626408 93961 303539 106239 197300 291261
6 397500 532446 79867 317633 111172 206461 286328
7 397500 452579 67887 329613 115365 214249 282135
8 397500 384693 397500 139125 258375 258375
Salvage Value 70000
Working Capital 150000
STCL 110142.377
PV of Cash Inflows
Cash out flows
NPV
*Cash inflow before Depreciation= 950000*.45-30000
Solution 1(4)
Additional WDV Additional CI after Dep Tax CI after Dep CI after Tax
Cash Depreciation@15% & Tax before Dep
Inflow
before
dep and
Tax

1 350000 800000 120000 230000 80500 149500 269500


2 350000 680000 102000 248000 86800 161200 263200
3 350000 578000 86700 263300 92155 171145 257845
4 350000 491300 73695 276305 96706.75 179598.25 253293.25
5 350000 417605 350000 122500 227500 227500
Salvage Value 80000
Working Capital 25000
STCL 118161.75
Total Cash Inflows
Cash out flows
NPV
PVF@10% PV of Cash
Inflows

0.909090909090909 276818
0.826446280991735 238926
0.751314800901578 207949
0.683013455365071 182313
0.620921323059155 141260
0.620921323059155 93138
0.620921323059155 31046
0.620921323059155 65318
1236768
1150000
86768

PVF@10% PV of Cash
Inflows

0.909090909090909 292159
0.826446280991735 257789
0.751314800901578 228319
0.683013455365071 202899
0.620921323059155 180850
0.564473930053777 161625
0.513158118230707 144780
0.466507380209733 120534
0.466507380209733 32656
0.466507380209733 69976
0.466507380209733 51382
1742970
1350000
392970
PVF@10% PV of Cash
Inflows

0.909090909090909 245000
0.826446280991735 217521
0.751314800901578 193723
0.683013455365071 173003
0.620921323059155 141260
0.620921323059155 49674
0.620921323059155 15523
0.620921323059155 73369
1109072
825000
284072
Solution 1(1)

Cash WDV Depreciation CI after Dep Tax CI after Dep CI after Tax
Inflow & Tax before Dep
before
dep and
Tax

1 350000 1100000 220000 130000 45500 84500 304500


2 350000 880000 176000 174000 60900 113100 289100
3 350000 704000 140800 209200 73220 135980 276780
4 350000 563200 112640 237360 83076 154284 266924
5 350000 450560 60112 289888 101460.8 188427.2 248539.2
Salvage Value 150000
Working Capital 50000
STCL
PV of Cash Inflows
Cash out flows
NPV

Solution 1(3)

Cash WDV Depreciation@15% CI after Dep Tax@35% CI after Dep CI after Tax
Inflow & Tax before Dep
before
dep and
Tax

1 397500 1200000 180000 217500 76125 141375 321375


2 397500 1020000 153000 244500 85575 158925 311925
3 397500 867000 130050 267450 93607.5 173842.5 303892.5
4 397500 736950 110543 286957.5 100435.13 186522.375 297064.875
5 397500 626408 93961 303539 106239 197300 291261
6 397500 532446 79867 317633 111172 206461 286328
7 397500 452579 67887 329613 115365 214249 282135
8 397500 384693 47204 350296 122604 227692 274896
Salvage Value 70000
Working Capital 150000
STCL
PV of Cash Inflows
Cash out flows
NPV
*Cash inflow before Depreciation= 950000*.45-30000

Solution 1(4)
Additional WDV Additional Depreciation CI after Dep Tax CI after Dep CI after Tax
Cash & Tax before Dep
Inflow
before
dep and
Tax

1 350000 800000 120000 230000 80500 149500 269500


2 350000 680000 102000 248000 86800 161200 263200
3 350000 578000 86700 263300 92155 171145 257845
4 350000 491300 73695 276305 96706.75 179598.25 253293.25
5 350000 417605 50641 299359.25 104775.74 194583.513 245224.263
Salvage Value 80000
Working Capital 25000
STCL
Total Cash Inflows
Cash out flows
NPV
PVF@10% PV of Cash
Inflows

0.909090909090909 276818
0.826446280991735 238926
0.751314800901578 207949
0.683013455365071 182313
0.620921323059155 154323
0.620921323059155 93138
0.620921323059155 31046
0
1184513
1150000
34513

PVF@10% PV of Cash
Inflows

0.909090909090909 292159
0.826446280991735 257789
0.751314800901578 228319
0.683013455365071 202899
0.620921323059155 180850
0.564473930053777 161625
0.513158118230707 144780
0.466507380209733 128241
0.466507380209733 32656
0.466507380209733 69976
0.466507380209733 0
1699295
1350000
349295
PVF@10% PV of Cash
Inflows

0.909090909090909 245000
0.826446280991735 217521
0.751314800901578 193723
0.683013455365071 173003
0.620921323059155 152265
0.620921323059155 49674
0.620921323059155 15523
0.620921323059155 0
1046708
825000
221708

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