valuing capital investment projects for practice.xls

7/27/2019 Valuing Capital Investment Projects for practice.xls

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0 1 2 3 0 1 2

Project A Project B

1 Revenues 1 Revenues

2 Operating costs 2 Operating costs

3 Opeating Profit 3 Opeating Profit

4 Depreciation 4 Depreciation5 Profit before tax 5 Profit before tax

6 Tax 6 Tax

7 Profit After Tax 7 Profit After Tax

8 Cash Flow 8 Cash Flow

9 Discount rate 9 Discount rate

11 PVIF 11 PVIF

12 PV of Cash Flows 12 PV of Cash Flows

13 NPV 13 NPV

14 IRR 14 IRR

0 1 2 3 0 1 2

Project C Project D

1 Revenues 1 Revenues

2 Operating costs 2 Operating costs

3 Opeating Profit 3 Opeating Profit4 Depreciation 4 Depreciation

5 Profit before tax 5 Profit before tax

6 Tax 6 Tax

7 Profit After Tax 7 Profit After Tax

8 Cash Flow 8 Cash Flow

9 Discount rate 9 Discount rate

11 PVIF 11 PVIF

12 PV of Cash Flows 12 PV of Cash Flows

13 NPV 13 NPV

Exercise 1



14 IRR 14 IRR



3

3



Exercise - 2

Assumption 0 1 2 3 4

1 Sales Given 10 13 13 8.58

2 Cost of Sales 60% 6 7.8 7.8 5.148

3 SG &A expenses 23.50% 2.35 3.055 3.055 2.0163

4 Introductory expenses Given 0.2

5 Depreciation SLM 0.1 0.1 0.1 0.1

6 Profit before taxes 1.35 2.045 2.045 1.3157

7 Taxes 0.54 0.818 0.818 0.52628

8 Profit after taxes 40% 0.81 1.227 1.227 0.78942

9 Gross Cash Flow 0.91 1.327 1.327 0.88942

9 Net working capital (end) 27% 2.7 3.51 3.51 2.3166 1.1583

Net Working Capital(beg) 0 2.7 3.51 3.51 2.3166

Change in Net working capital Delta NWC 2.7 0.81 0 -1.1934 -1.1583

11 Capital Expenditure 0.5

10 Free Cash Flow

12 PVIF



13 Present Value

14 NPV

11 IRR

DR NPV

0.05

100.05

200.05

300.05

400.05

500.05

600.05

700.05

800.05

900.05

1000.05

1100.05

1200.05

1300.05

1400.05

1500.05

1600.05

1700.05

1800.05

1900.05



0%



5

4.29

2.574

1.00815

0.1

0.60785

0.24314

0.36471

0.46471

0

1.1583

-1.1583



2%



Series1



0 1 2 3 0 1 2

Project A Project B

1 Revenues 21000 0 0 1 Revenues 15000 17000

2 Operating costs 11000 0 0 2 Operating costs 5833 7833

3 Opeating Profit 10000 0 0 3 Opeating Profit 9167 9167

4 Depreciation 10000 0 0 4 Depreciation 5000 5000

5 Profit before tax 0 0 0 5 Profit before tax 4167 4167

6 Tax 0 0 0 6 Tax 1667 1667

7 Profit After Tax 0 0 0 7 Profit After Tax 2500 2500

8 Cash Flow -10000 10000 0 0 8 Cash Flow -10000 7500 7500

9 Discount rate 10% 0 0 9 Discount rate 10.000

11 PVIF 1.000 0.90909 0.82645 0.75131 11 PVIF 1.000000 0.090909 0.008264

12 PV of Cash Flows -10000.000 9091 0 0 12 PV of Cash Flows -10000 682 62

13 NPV -909.091 13 NPV -9256

14 IRR 0% 14 IRR 32%MIRR

0 1 2 3 0 1 2

Project C Project D

1 Revenues 10000 11000 30000 1 Revenues 30000 10000

2 Operating costs 5555 4889 15555 2 Operating costs 15555 5555

3 Opeating Profit 4445 6111 14445 3 Opeating Profit 14445 4445

4 Depreciation 3333 3333 3333 4 Depreciation 3333 3333

5 Profit before tax 1112 2778 11112 5 Profit before tax 11112 1112

6 Tax 445 1111 4445 6 Tax 4445 445

7 Profit After Tax 667 1667 6667 7 Profit After Tax 6667 667

8 Cash Flow -10000 4000 5000 10000 8 Cash Flow -10000 10000 4000

9 Discount rate 10.0000 9 Discount rate 10%

11 PVIF 1.0000000 0.0909091 0.0082645 0.0007513 11 PVIF 1 0.909091 0.826446

12 PV of Cash Flows -10000 364 41 8 12 PV of Cash Flows -10000 9091 3306

13 NPV -9587.5115 13 NPV 4650.985725

14 IRR 0.33530 14 IRR 0.42747

Exercise 1



DR NPV C DR NPV D Diff

-9588 4651

0.1000 5282 0.1000 4651 631

0.1200 4675 0.1200 4253 422

0.1400 4106 0.1400 3875 231

0.1600 3571 0.1600 3516 55

0.1800 3067 0.1800 3174 -106

0.2000 2593 0.2000 2848 -255

0.2200 2145 0.2200 2537 -391

0.2400 1723 0.2400 2240 -517

0.2600 1323 0.2600 1956 -633

0.2800 945 0.2800 1685 -739

0.3000 587 0.3000 1425 -8380.3200 248 0.3200 1176 -928

0.3400 -74 0.3400 937 -1012

0.3600 -380 0.3600 708 -1088

0.3800 -671 0.3800 489 -1159

0.4000 -947.41 0.4000 277 -1225

0.4200 -1210.83 0.4200 74 -1285

0.4400 -1461.87 0.4400 -122 -1340

0.4600 -1701.28 0.4600 -310 -1391

0.4800 -1929.79 0.4800 -491 -1438



-2000

-1000

0

1000

2000

3000

4000

5000

6000

0.0000 0.1000 0.2000 0.3000 0.4000 0.5000 0.6000

Chart Title

Series1 Series2



Project NPV IRR

B 3017 3 0.3200000 3

C 5281 1 0.3300000 2

D 4650 2 0.4300000 1

-3000



3

0

0

0

0

0

0

0

0

0

0.000751

0

3

5000

2222

2778

3333

-555

-222

-333

3000

0.751315

2254

valuing capital investment projects for practice.xls

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