Maket demand of cinema ticket

QD Price of ticket

- $ 50

10 $ 40

20 $ 30

30 $ 20

40 $ 10

50 $ -

QD= -p+ 50

QD2= -p+40

QD3= -p+60

Price of ticket QD2 QD1

60 - -

50 - -

40 0 10

30 10 20

20 20 30

10 30 40

0 40 50

20

30

40

50

60

70

P

Shift in the market demand for cinema ticket

U.S

Income tax rate 40%

Revenue (1000 units) TR TR=Q*P=1000*750 750,000

Input 500000

Cost of production TC= 10000*10+1000 11,000

Gross profit Pr= TR-TC 739,000

Operating expenses //

Profit before taxes 739,000

Income taxes Ci Ci=Pr*40% 295,600

Profit after taxes 443,400

Combined result Taxes

Profit

Income tax rate  40%

Revenue (1000 units) TRUS=Q*P=1000*750 750,000

Cost of production TCUS= 10000*10+1000 11,000

Profit before taxes  PrUS= TRUS-TCUS 739,000

Income taxes Ci CiUS=PrUS*40% 295,600

Profit after taxes

For each market

Tax Combined result

U.S

443,400

-

10

20

0 10 20 30

QD3

Price of

ticket

0

10 $ 10 50

20 40 40

30 30 30

40 50 20

50 10

60 0

$-

$10

$20

$30

$40

$50

$60

- 10 20 30 40

Series1

$-

$10

$20

$30

$40

$50

$60

- 20 40 60Q

Market demand of cinema ticket

QD

0

10

20

30

40

50

60

$- $5 $10 $15

Axis Title

Shift in the market demand for cinema ticket

QD2

QD1

QD3

Country M

20%

TR=Q*P=500*1000 500,000

TC= FC+VC= 10000+325 10,325

489,675

//

489,675

Ci=Pr*20% 97,935

391,740

335,140

835,140

 20%

TRM=Q*P=600*1000 600,000

TCM= FC+VC= 10000+325 10,325

 PrM= TRM - TCM 589,675

CiM=Pr*20% 117,935

315,140

Country M

471,740

Axis Title

40 50 60 70Q

QD3

#REF!

#REF!

#REF!

Machine A Machine B Machine C

15,000.00$ 22,500.00$ 37,500.00$

Cash In Flow Year 1 6,000.00$ 12,000.00$ -$ 10,500.00$

Cash In Flow Year 2 9,000.00$ 12,000.00$ 30,000.00$ 750.00$

=0 at the end of

Second years years

= 0 at the time

1.88 year

Cash In Flow Year 3 3,000.00$ 10,500.00$ 30,000.00$ 0.25

= 0 at the time 3.25 year

Cash In Flow Year 4 -$ 10,500.00$ 15,000.00$

Cash In Flow Year 5 -$ -$ 15,000.00$

Depreciation-Old

Helicopter

Investment

depreciation

Value 350000 60,000$ Year 1 20% 70000 13,500$

Year 2 32% 112000 13,500$

Year 3 19.20% 67200 13,500$

Year 4 11.52% 40320 13,500$

Year 5 11.52% 40320 6,000$

Year 6 5.76% 20160

42000

288000

Depreciation-New Helicopter

(using the 5-year MACRS schedule)

1,500.00$ 125.00$

0.88$

Year 0 Year 1 Year 2 Year 3

Value of New helicopter 350,000.00$ Depreciation-New

Helicopter 20% 32% 19.20% 11.52%

Depreciation-New

Helicopter

(using the 5-year MACRS

schedule) 70,000$ 112,000$ 67,200$ 40,320$

Depreciation-Old

Helicopter 13,500$ 13,500$ 13,500$

Investment depreciation 70,000$ 98,500$ 53,700$ 26,820$

Total Depreciation Tax

Shield 23,800$ 33,490$ 18,258$ 9,119$

Year 0 Year 1 Year 2 Year 3

Value of New helicopter 350,000.00$

Cash from sellling old

helicopter 68000

Cash from buying new

helicopter (350,000)$ (350,000)$ (350,000)$ (350,000)$

Cash from saving fuel 62,000$ 62,000$ 62,000$

Year 4 Year 5

11.52% 5.76%

40,320$ 20,160$

13,500$

26,820$ 20,160$

9,119$ 6,854$

Year 4 Year 5

(350,000)$ (350,000)$

62,000$ 62,000$

Probability Cash Flow

0.15 60,000 9,000

0.25 85,000 21,250

0.45 110,000 49,500

0.15 130,000 19,500

Total Expect cash flow 99,250

Out Comes Probability of Outcome Assumption

5,250$ 25% pessimistic

7,800$ 45% moderarely successful

13,500$ 30% optimistic

0 1 2 3 4 5 6 7 8

Free cash flow -625000 99,250 99,250 99,250 99,250 99,250 99,250 99,250 99,250

Project cost of capital 10%

Discount factor 1 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467

PV of Free cash flow -625000 90227 82025 74568 67789 61626 56024 50931 46301

Salvage value 50000

NPV 34848

Year

9 10

99,250 99,250

0.424 0.386

42092 38265

Year

Probabilit

y

Cash

flowR1

Probabilit

y

Cash

flowR2

3.33% 400 13.33 5% 300 15

90.00% 500 450.00 5% 500 25

6.67% 700 46.67 90% 700 630

510 670

0.25 500 125 0.3 300 90

0.5 600 300 0.5 500 250

0.25 700 175 0.2 700 140

600 480

Expected Value

Year 0 Year 1 Year 2

-1,000

R

k = 0.07

61.83946196

-20.00174688