HOMENET KEY ASSUMPTIONS Year 0 Key Assumptions HomeNet Units Sold (000s) Sale Price ($/unit) Cost of Goods ($/unit) Existing Router Units Sold (000s) 25% Sale Price ($/unit) Cost of Goods ($/unit) Operating Expenses ($000s) Hardware & Software Develop. (15,000) Marketing & Support Lost Rent Capital Expenditures Lab Equipment (7,500) Depreciation Marginal Corporate Tax Rate 40% Working Capital Receivables (% of Sales) Payables (% of COGS) INCREMENTAL EARNINGS Year Incremental Earnings Forecast ($000s) 1 Sales 2 Cost of Goods Sold 3 Gross Profit 4 Selling, General & Admin. 5 Research & Development 6 Depreciation 7 EBIT 8 Income tax at 40% 9 Unlevered Net Income 0 1 2 3 4 5 1 2 3 4 5
100 260 110 25 100 60
100 260 110 25 100 60
100 260 110 25 100 60
100 260 110 25 100 60
(2,800) (200)
(2,800) (200)
(2,800) (200)
(2,800) (200)
20% 40% 15% 15%
20% 40% 15% 15%
20% 40% 15% 15%
20% 40% 15% 15%
20% 40%
NET WORKING CAPITAL (Table 7.4) Year Net Working Capital Forecast ($000s) 1 Cash requirements 2 Inventory 3 Receivables (15% of Sales) 4 Payables (15% of COGS) 5 Net Working Capital FREE CASH FLOW FORECAST (Table 7.3) Year 9 Unlevered Net Income Free Cash Flow ($000s) 10 Plus: Depreciation 11 Less: Capital Expenditures 12 Less: Increases in NWC 13 Free Cash Flow NPV CALCULATION (Table 7.5) Year Net Present Value ($000s) 1 Free Cash Flow 2 Project Cost of Capital 3 Discount Factor 4 PV of Free Cash Flow 5 NPV IRR 0 12% 1.000 #NUM! 0.893 0.797 0.712 0.636 0.567 1 2 3 4 5 0 1 2 3 4 5 0 1 2 3 4 5 -
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