Project Cost 10,000,000

Weightage
Debt 55%
Equity 45%
Cost
Interest - Debt 13%
Cost of Equity 25% discount rate

Project cost is incurred in 0th period

Asset recognised worth the project cost with a useful life of 4 years and 0 salvage value
Depreciation as per Company ACT - 25% SLM
Evaluate the business proposal using NPV and IRR.

Drivers Year - 1 Growth - y/y

Sales Price/Unit 3750 10%
Cost Price/Unit 2750 10%
Quantity/Unit 25000 5%

Opex 20% <== of revenues

Tax Rate 30% <== applicable on PBT
Working Capital requirement 4% <== of revenues

Loan repayment happens at end of period

Years Year-1 Year-2
Repayment Schedule 500,000 1,000,000

Interest rate on surplus cash 12% <== compute on beginning cash value

Sensitivity of NPV
Growth in Sales Price %

2.5%
5.0%
7.5%
10.0%
12.5%
15.0%
17.5%
 Cash Flow

30000
Year-3 Year-4
1,500,000 2,500,000

pute on beginning cash value

Debt %
0% 20% 40% 60% 80%
 12%
0 1 2 3 4 5
-2000 200 200 300 450 500

-878.76

95%
 Year - 0 Year - 1 Year - 2 Year - 3

Drivers

Sales Price 93,750,000 98,437,500 108,281,250

Cost Price 68,750,000 75,625,000 83,187,500
Volume 25,000,000 22,812,500 25,093,750

Unit 25,000.000 26,250.000 27,562.500

625,000,000,000 598,828,125,000 691,646,484,375
1,718,750,000,000 1,985,156,250,000 2,292,855,468,750
 Year - 4

119,109,375
91,506,250
27,603,125

28,940.625
798,851,689,453
2,648,248,066,406
 Year - 0 Year - 1 Year - 2 Year - 3

Balance Sheet

Cash
Working Capital
PPE, Gross (Fixed Asset)
Accumulated Depreciation
PPE, Net
Total Assets

Debt
Equity
Retained Earning
Total Liabilities & Sh Equity
check - - - -
Year - 4

-
 Year - 0 Year - 1 Year - 2 Year - 3

Income Statement

Revenue 25,000,000 22,812,500 25,093,750

Costs 68,750,000 75,625,000 83,187,500
Gross Profit - 43,750,000 - 52,812,500 - 58,093,750

Operating Costs 5,000,000 4,562,500 5,018,750

EBITDA - 48,750,000 - 57,375,000 - 63,112,500

Depreciation 2,500,000 2,500,000 2,500,000

EBIT - 51,250,000 - 59,875,000 - 65,612,500

Interest Expense 715,000 715,000 715,000

Interest Income
EBT

Tax Expense
PAT / Net Income
 Year - 4

27,603,125
91,506,250
- 63,903,125 -232%

5,520,625
- 69,423,750

2,500,000
- 71,923,750

715,000
 Year - 0 Year - 1 Year - 2 Year - 3

Cash Flow Statement

Net Income / PAT

Add: Depreciation
Less:Working Capital Change
Cash flow from Operations (CFO)

Purchase of Asset
Cash flow from Investing (CFI)

Debt Raised / (Repaid)

Equity Raised
Cash flow from Financing (CFF)

Net Cash change (CFO + CFI + CFF)

Cash - BOP
Cash - EOP
Year - 4
 Year - 0 Year - 1 Year - 2

Returns

Cost of Equity

Free Cash Flow = CFO + CFI + Debt Raised - Debt Repaid

NPV
IRR
Year - 3 Year - 4