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Moon Light

This document summarizes the cash flows and net present value (NPV) calculations for a joint venture between two companies over 5 years. It shows the sales, costs, earnings before interest and taxes (EBIT), depreciation, earnings before taxes (EBT), taxes, earnings after taxes (EAT), and cash flows for each year. It then calculates the NPV of the cash flows at discount rates of 12% and 15% to determine the profitability of the project. The NPV is positive at both rates, indicating the joint venture is profitable.

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Aniket Puri
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76 views4 pages

Moon Light

This document summarizes the cash flows and net present value (NPV) calculations for a joint venture between two companies over 5 years. It shows the sales, costs, earnings before interest and taxes (EBIT), depreciation, earnings before taxes (EBT), taxes, earnings after taxes (EAT), and cash flows for each year. It then calculates the NPV of the cash flows at discount rates of 12% and 15% to determine the profitability of the project. The NPV is positive at both rates, indicating the joint venture is profitable.

Uploaded by

Aniket Puri
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd
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Out flow statement

Year Flow (Cr) PVF@12% PV Value of Flow PVF@15%

0 270 1 270 1
1 4 0.909 3.636 0.87
2 4 0.826 3.304 0.756
3 4 0.751 3.004 0.658
4 4 0.683 2.732 0.572
Out flow 282.676

Statement of Flow

Particulars Year I Year 2 Year 3 Year 4 Year 5

Sales (24*10) 240 264 288 312 336


Less (Cost) 96 105.6 115.2 124.8 134.4
EBIT 144 158.4 172.8 187.2 201.6
Less Depriciation 44 44 44 44 44
EBT 100 114.4 128.8 143.2 157.6
less tax @ 30% 30 34.32 38.64 42.96 47.28
EAT 70 80.08 90.16 100.24 110.32
Add Depriciation 44 44 44 44 44
Cash flow 114 124.08 134.16 144.24 154.32

Calculation of NPV

Year inflow PVF @ 12% pv of inflow


0 0 1 0
1 114 0.909 103.626
2 124.1 0.826 102.5066
3 134.2 0.751 100.7842
4 144.2 0.683 98.4886
5 154.3 0.621 95.8203
6(Terminal Flow) 86 0.564 48.504
66+20 PV Of Inflow 549.7297
Less PV Of Outflow 267.0537

NPV@12% 282.676

WACC shall be the hurdle rate or discounted factor. But given the risk rate included it shall be taken for Discounted factor @15%
PV Value of Flow

270 WN1
3.48
3.024 cost of machine 220
2.632 SLM Depriciation
2.288 20% 44
281.424

WN 2

Sales 240
Cost 40% 96

Year inflow PVF @ 15% pv of inflow


0 0 1 0
1 114 0.87 99.18
2 124.1 0.756 93.8196
3 134.2 0.658 88.3036
4 144.2 0.572 82.4824
5 154.3 0.497 76.6871
6(Terminal Flow) 86 0.432 37.152
66+20 In 477.6247
Less Out 281.424

NPV@15% 196.2007
Out flow

For JV

Particulars Year I Year 2 Year 3 Year 4 Year 5

Sales (24*10) 240 264 288 312 336


Less (Cost) 96 105.6 115.2 124.8 134.4
EBIT 144 158.4 172.8 187.2 201.6
Less Depriciation 44 44 44 44 44
EBT 100 114.4 128.8 143.2 157.6
less tax @ 30% 30 34.32 38.64 42.96 47.28
EAT 70 80.08 90.16 100.24 110.32
Add Depriciation 44 44 44 44 44
Cash flow 114 124.08 134.16 144.24 154.32

Year Outflow rate of Dollar Sunshine co

0 270 60 2.7
1 4 60 0.04
2 4 63 0.038095238
3 4 62 0.038709677
4 4 62.5 0.0384
2.855204916
240

For sunshine company

Year I Year 2 Year 3 Year 4 Year 5


Sales 240 264 288 312 336
Revenue 144 158.4 172.8 187.2 201.6
Less cost 57.6 63.36 69.12 74.88 80.64
EBIT 86.4 95.04 103.68 112.32 120.96
Dep 26.4 26.4 26.4 26.4 26.4
EBT 60 68.64 77.28 85.92 94.56
In $ terms 1 1.089524 1.246452 1.37472 1.4775
Add Royalty 0.24 0.24 0.24 0.24 0.24
Total eBT 1.24 1.329524 1.486452 1.61472 1.7175
Less Tax 0.4464 0.478629 0.535123 0.581299 0.6183
EAT 0.7936 0.850895 0.951329 1.033421 1.0992
Add Dep Cash flow 1.2336 1.269943 1.377135 1.455821 1.5117

Year

1 1.2336 0.87 1.073232


2 1.269954 0.756 0.960085
3 1.377135 0.658 0.906155
4 1.455821 0.572 0.83273
5 1.5117 0.497 0.751315
6 0.76 0.432 0.32832
inflow 4.851837
outflow 2.855205
NPV 1.996632

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