Professional Documents
Culture Documents
Example
Suppose a business has 3 production lines ( block 20m, block 15, block 10 )
Total Investment
Maximum capacity for quantity produced of block 20 cm
per annum
Maximum capacity for quantity produced of block 15 cm
per annum
Maximum capacity for quantity produced of block 10 cm
per annum
Selling price per unit of block 20 cm ( US$ )
Selling price per unit of block 15 cm ( US$ )
Selling price per unit of block 10 cm ( US$ )
Annual increase in price
First Year Operation Cost ( OC )
Annual increase in OC
Operation Ratio during the project life respectively
Tax Rate %
Discount Rate
Project life span
Minimum acceptable rate of return
1. Calculate the NR for this business, NPV, IRR, PI, Payback perio
2. Test the sensitivity of the project ?
Sensitivity Analysis
m, block 15, block 10 ) and the information about this business are as follow :
-183,600
384,000
384,000
460,800
1
0.842
0.632
5%
704,908
5%
80%, 85% , 90%, 95% , 100%, 100%, 105%, 110%, 115%, 120% , 125%
20%
15%
10 Years
35%
IRR, PI, Payback period, discounted payback, ARR, NARR, discounted ARR, Discounted NARR, Pay-off period rate of retu
TR from block 20 cm
Year
Price
1
2
3
4
5
6
7
8
9
10
1
1.05
1.10
1.16
1.22
1.28
1.34
1.41
1.48
1.55
Operation
Rate %
0.80
0.85
0.90
0.95
1.00
1.05
1.10
1.15
1.20
1.25
Quantity
TR (1)
384,000
384,000
384,000
384,000
384,000
384,000
384,000
384,000
384,000
384,000
307,200
342,720
381,024
422,302
466,754
514,597
566,056
621,376
680,811
744,638
TR from block 15 cm
Year
Price
1
2
3
4
5
6
7
8
9
10
0.842
0.884
0.928
0.975
1.024
1.075
1.129
1.185
1.244
1.306
Operation
Rate %
0.80
0.85
0.90
0.95
1.00
1.05
1.10
1.15
1.20
1.25
Quantity
TR (2)
384,000
384,000
384,000
384,000
384,000
384,000
384,000
384,000
384,000
384,000
258,695
288,606
320,862
355,622
393,056
433,345
476,679
523,264
573,315
627,063
TR from block 10 cm
Year
Price
1
2
3
4
5
6
7
8
9
10
0.632
0.663
0.696
0.731
0.768
0.806
0.846
0.889
0.933
0.980
Operation
Rate %
0.80
0.85
0.90
0.95
1.00
1.05
1.10
1.15
1.20
1.25
Quantity
TR (3)
460,800
460,800
460,800
460,800
460,800
460,800
460,800
460,800
460,800
460,800
232,825
259,746
288,776
320,060
353,751
390,010
429,011
470,937
515,983
564,357
Year
1
2
3
4
5
6
7
8
9
10
TR 1
307,200
342,720
381,024
422,302
466,754
514,597
566,056
621,376
680,811
744,638
TR 2
258,695
288,606
320,862
355,622
393,056
433,345
476,679
523,264
573,315
627,063
TR 3
232,825
259,746
288,776
320,060
353,751
390,010
429,011
470,937
515,983
564,357
TR 4
0
0
0
0
0
0
0
0
0
0
Year
Raw material
increase by 5%
Human
Resources
increase by 5%
Utilities
increase by
10%
Land Rent
increase by 5%
1
2
3
4
5
6
7
8
9
10
381,000
400,050
420,053
441,055
463,108
486,263
510,576
536,105
562,911
591,056
14,400
15,120
15,876
16,670
17,503
18,378
19,297
20,262
21,275
22,339
3,000
3,300
3,465
3,638
3,820
4,011
4,212
4,422
4,643
4,876
8,000
8,400
8,820
9,261
9,724
10,210
10,721
11,257
11,820
12,411
New Total
Revenue
Operation Cost
Depreciation
Total Cost
0
1
2
3
4
5
6
7
8
9
10
0
342,900
360,045
378,047
396,950
416,797
437,637
459,519
482,495
506,619
531,950
0
14,400
15,120
15,876
16,670
17,503
18,378
19,297
20,262
21,275
22,339
3,000
3,300
3,465
3,638
3,820
4,011
4,212
4,422
4,643
4,876
17,400
18,420
19,341
20,308
21,323
22,390
23,509
24,685
25,919
27,215
Total Revenue
0
1
2
3
0
381,000
400,050
420,053
New Operation
Cost
Depreciation
Total Cost
15,840
16,632
17,464
3,000
3,300
3,465
18,840
19,932
20,929
4
5
6
7
8
9
10
441,055
463,108
486,263
510,576
536,105
562,911
591,056
18,337
19,254
20,216
21,227
22,288
23,403
24,573
3,638
3,820
4,011
4,212
4,422
4,643
4,876
21,975
23,074
24,227
25,439
26,711
28,046
29,449
New Total
Revenue
New Operation
Cost
Depreciation
Total Cost
0
1
2
3
4
5
6
7
8
9
10
0
342,900
360,045
378,047
396,950
416,797
437,637
459,519
482,495
506,619
531,950
15,840
16,632
17,464
18,337
19,254
20,216
21,227
22,288
23,403
24,573
3,000
3,300
3,465
3,638
3,820
4,011
4,212
4,422
4,643
4,876
18,840
19,932
20,929
21,975
23,074
24,227
25,439
26,711
28,046
29,449
Total Revenue
Operation Cost
Depreciation
Total Cost
0
1
2
3
4
5
6
7
8
9
10
0
381,000
400,050
420,053
441,055
463,108
486,263
510,576
536,105
562,911
591,056
14,400
15,120
15,876
16,670
17,503
18,378
19,297
20,262
21,275
22,339
3,000
3,300
3,465
3,638
3,820
4,011
4,212
4,422
4,643
4,876
#REF!
17,400
18,420
19,341
20,308
21,323
22,390
23,509
24,685
25,919
27,215
Total Revenue
Operation Cost
Depreciation
Total Cost
0
1
2
3
4
5
6
7
8
9
10
0
381,000
400,050
420,053
441,055
463,108
486,263
510,576
536,105
562,911
591,056
14,400
15,120
15,876
16,670
17,503
18,378
19,297
20,262
21,275
22,339
3,000
3,300
3,465
3,638
3,820
4,011
4,212
4,422
4,643
4,876
#REF!
17,400
18,420
19,341
20,308
21,323
22,390
23,509
24,685
25,919
27,215
Year
Total Revenue
Operation Cost
Depreciation
Total Cost
0
1
2
3
0
381,000
400,050
420,053
14,400
15,120
15,876
3,000
3,300
3,465
#REF!
17,400
18,420
19,341
wage
Year
Total
Revenue
1
2
3
4
5
6
7
8
9
10
381,000
400,050
420,053
441,055
463,108
486,263
510,576
536,105
562,911
591,056
Material
Value Added
Inputs
Depreciation = TR - (MI +
increase by
D)
5%
628,608
660,038
693,040
727,692
764,077
802,281
842,395
884,515
928,740
975,177
3,000
3,300
3,465
3,638
3,820
4,011
4,212
4,422
4,643
4,876
-250,608
-263,288
-276,453
-290,275
-304,789
-320,029
-336,030
-352,832
-370,473
-388,997
Year
Total
Revenue
Material
Inputs
1
2
3
4
5
6
7
8
9
10
381,000
400,050
420,053
441,055
463,108
486,263
510,576
536,105
562,911
591,056
628,608
660,038
693,040
727,692
764,077
802,281
842,395
884,515
928,740
975,177
Value Added
Depreciation = TR - (MI +
D)
3,000
3,300
3,465
3,638
3,820
4,011
4,212
4,422
4,643
4,876
-250,608
-263,288
-276,453
-290,275
-304,789
-320,029
-336,030
-352,832
-370,473
-388,997
TR 5
0
0
0
0
0
0
0
0
0
0
TR 6
0
0
0
0
0
0
0
0
0
0
TR
798,720
891,072
990,662
1,097,984
1,213,561
1,337,951
1,471,747
1,615,576
1,770,110
1,936,058
Poultry
house
preparation
Maintenance
cost
increase by 10% Disinfection
and cleaning
5%
GAS5%
Drugs 5%
wood chips 5%
nylon 5%
1,000
1,100
1,155
1,213
1,273
1,337
1,404
1,474
1,548
1,625
1,200
1,260
1,323
1,389
1,459
1,532
1,608
1,689
1,773
1,862
20,900
21,945
23,042
24,194
25,404
26,674
28,008
29,408
30,879
32,423
10,800
11,340
11,907
12,502
13,127
13,784
14,473
15,197
15,957
16,754
9,400
9,870
10,364
10,882
11,426
11,997
12,597
13,227
13,888
14,582
1,200
1,260
1,323
1,389
1,459
1,532
1,608
1,689
1,773
1,862
Tax 20%
Profit after
tax
Net returns
PV@15%
NR@15%
328,500
276,600
290,430
304,952
320,199
336,209
353,019
370,670
389,204
408,664
1
0.870
0.756
0.658
0.572
0.497
0.432
0.376
0.327
0.284
0.247
#REF!
285,795
209,110
191,103
174,432
159,139
145,242
132,735
121,209
110,534
100,940
#REF!
#REF!
#REF!
#REF!
#REF!
#REF!
325,500
341,625
358,706
376,642
395,474
415,247
436,010
457,810
480,701
504,736
0
68,325
71,741
75,328
79,095
83,049
87,202
91,562
96,140
100,947
325,500
273,300
286,965
301,313
316,379
332,198
348,808
366,248
384,561
403,789
NPV
IRR
PI
ARR
B / C ratio
#REF!
362,160
380,118
399,124
Tax 20%
72,432
76,024
79,825
Profit after
tax
289,728
304,094
319,299
Net returns
PV@15%
NR@15%
292,728
307,394
322,764
1
0.870
0.756
0.658
#REF!
254,673
232,390
212,379
total
Operation
cost
450,900
473,645
497,327
522,194
548,303
575,718
604,504
634,730
666,466
699,789
0
419,080
440,034
462,036
485,138
509,394
534,864
561,607
83,816
88,007
92,407
97,028
101,879
106,973
112,321
335,264
352,027
369,629
388,110
407,516
427,891
449,286
338,902
355,847
373,640
392,322
411,938
432,535
454,162
NPV
IRR
PI
ARR
B / C ratio
#REF!
324,060
340,113
357,119
374,975
393,723
413,409
434,080
455,784
478,573
502,502
0.572
0.497
0.432
0.376
0.327
0.284
0.247
Tax 20%
0
0
71,424
74,995
78,745
82,682
86,816
91,157
95,715
100,500
Profit after
tax
324,060
340,113
285,695
299,980
314,979
330,728
347,264
364,627
382,859
402,001
Net returns
PV@15%
NR@15%
327,060
343,413
289,160
303,618
318,799
334,739
351,476
369,049
387,502
406,877
1
0.870
0.756
0.658
0.572
0.497
0.432
0.376
0.327
0.284
0.247
#REF!
284,542
259,620
190,267
173,669
158,443
144,607
132,155
120,679
110,051
100,499
#REF!
#REF!
#REF!
#REF!
Net returns
PV@20%
NR@20%
#REF!
293,880
308,604
324,034
340,236
357,248
375,110
393,866
413,559
434,237
455,949
1.000
0.833
0.694
0.579
0.482
0.402
0.335
0.279
0.233
0.194
0.162
#REF!
244,802
214,171
187,616
163,994
143,614
125,662
109,889
96,359
84,242
73,864
NPV
IRR
PI
ARR
Tax 20%
Profit after
tax
363,600
381,630
400,712
420,747
441,784
463,874
487,067
511,421
536,992
563,841
72,720
76,326
80,142
84,149
88,357
92,775
97,413
102,284
107,398
112,768
290,880
305,304
320,569
336,598
353,428
371,099
389,654
409,137
429,593
451,073
193,852
176,856
161,412
147,513
134,704
122,840
112,178
#REF!
#REF!
#REF!
#REF!
#REF!
NPV
IRR
PI
ARR
Tax 30%
Profit after
tax
363,600
381,630
400,712
420,747
441,784
463,874
487,067
511,421
536,992
563,841
109,080
114,489
120,213
126,224
132,535
139,162
146,120
153,426
161,098
169,152
254,520
267,141
280,498
294,523
309,249
324,712
340,947
357,994
375,894
394,689
#REF!
#REF!
#REF!
#REF!
Net returns
PV@15%
NR@15%
#REF!
257,520
270,441
283,963
298,161
313,069
328,723
345,159
362,417
380,538
399,565
1
0.870
0.756
0.658
0.572
0.497
0.432
0.376
0.327
0.284
0.247
#REF!
224,042
204,453
186,848
170,548
155,595
142,008
129,780
118,510
108,073
98,692
#REF!
#REF!
#REF!
#REF!
Net returns
PV@15%
NR@15%
#REF!
293,880
308,604
324,034
1
0.870
0.756
0.658
#REF!
255,676
233,305
213,215
#REF!
#REF!
#REF!
#REF!
NPV
IRR
PI
ARR
rate 20% , discount rate 15% and project life span 3 years
Tax 20%
Profit after
tax
363,600
381,630
400,712
72,720
76,326
80,142
290,880
305,304
320,569
wage
NPV
IRR
PI
ARR
Total Wages
Social
increases by
Surplus
5%
39,000
40,950
42,998
45,147
47,405
49,775
52,264
54,877
57,621
60,502
-289,608
-304,238
-319,450
-335,423
-352,194
-369,804
-388,294
-407,709
-428,094
-449,499
between the accepted projects when there is a limited capital or skilled workers
Total Wages
Social
increases by
Surplus
5%
39,000
40,950
42,998
45,147
47,405
49,775
52,264
54,877
57,621
60,502
-289,608
-304,238
-319,450
-335,423
-352,194
-369,804
-388,294
-407,709
-428,094
-449,499
PV@15%
PV(VA)
PV(Wage)
0.870
0.756
0.658
0.572
0.497
0.432
0.376
0.327
0.284
0.247
-218,029
-199,046
-181,906
-166,038
-151,480
-138,252
-126,347
-115,376
-105,214
-96,082
33,930
30,958
28,292
25,824
23,560
21,503
19,651
17,945
16,364
14,944
-251,959
-230,004
-210,198
-191,862
-175,040
-159,755
-145,998
-133,321
-121,579
-111,026