# Capital Budgeting Analysis with Excel Model

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```									CAPITAL BUDGETING/PROJECT ANALYSIS
MARCS Depreciation
Rates
Cost of New Equipment(Initial Outlay )   \$   100,000.00
Disposal Amount at the End                    14,285.00        Year
1                 15.00%
2                 15.00%
3                 15.00%
4                 15.00%
5                 15.00%
6                 15.00%
7                  0.00%

PROJECT                                  FAVOURABLE

Tax Rate                                        45.00%
Required Rate of Return Discount rate)           6.50%
NET PRESENT VALUE                            \$3,975.60

YEAR 1              YEAR 2              YEAR 3            YEAR 4            YEAR 5            YEAR 6            YEAR 7
Volume To be Sold ( Quantity)                                       20000                 20000             20000             20000             20000             20000             20000
Selling price per Unit                                    \$         10.00 \$               10.00 \$           10.00 \$           10.00 \$           10.00 \$           10.00 \$           10.00
Additional Cash Generated                                 \$    200,000.00 \$          200,000.00 \$      200,000.00 \$      200,000.00 \$      200,000.00 \$      200,000.00 \$      200,000.00
Variable Cost                                             \$ (300,000.00) \$        (300,000.00) \$ (300,000.00) \$ (300,000.00) \$ (300,000.00) \$ (300,000.00) \$ (300,000.00)
Variable Cost Tax Savings                                 \$    135,000.00   \$        135,000.00   \$    135,000.00   \$    135,000.00   \$    135,000.00   \$    135,000.00   \$    135,000.00
Fixed Cost                                                \$   (40,000.00) \$        (40,000.00) \$      (40,000.00) \$     (40,000.00) \$     (40,000.00) \$ (40,000.00) \$         (40,000.00)
Fixed Cost Tax Savings                                    \$     18,000.00   \$         18,000.00   \$     18,000.00   \$     18,000.00   \$     18,000.00   \$     18,000.00   \$     18,000.00
Depreciation                                              \$      6,750.00   \$          6,750.00   \$      6,750.00   \$      6,750.00   \$      6,750.00   \$      6,750.00   \$           -
Cash Inflow From The Operations                           \$     19,750.00   \$         19,750.00   \$     19,750.00   \$     19,750.00   \$     19,750.00   \$     19,750.00   \$     13,000.00

Equipment Disposal                       \$     7,856.75
Cash Inflow From The Project                              \$     19,750.00   \$         19,750.00   \$     19,750.00   \$     19,750.00   \$     19,750.00   \$     19,750.00   \$     13,000.00
Year
1                 15.00%
2                 15.00%
3                 15.00%
4                 15.00%
5                 15.00%
6                 15.00%
7                  0.00%

PROJECT                                  FAVOURABLE

Tax Rate                                         45.00%
Required Rate of Return Discount rate)            6.50%
NET PRESENT VALUE                            \$3,975.60

YEAR 1             YEAR 2
Volume To be Sold ( Quantity)                                       20000                20000
Selling price per Unit                                    \$         10.00 \$              10.00
Additional Cash Generated                                 \$    200,000.00 \$         200,000.00
Variable Cost                                             \$ (300,000.00) \$        (300,000.00)
Variable Cost Tax Savings                                 \$    135,000.00   \$       135,000.00
Fixed Cost                                                \$   (40,000.00) \$        (40,000.00)
Fixed Cost Tax Savings                                    \$     18,000.00   \$        18,000.00
Depreciation                                              \$      6,750.00   \$         6,750.00
Cash Inflow From The Operations                           \$     19,750.00   \$        19,750.00

Equipment Disposal                       \$     7,856.75
Cash Inflow From The Project                              \$     19,750.00   \$        19,750.00
CAPITAL BUDGETING/PROJECT ANALYSIS

YEAR 3            YEAR 4            YEAR 5            YEAR 6            YEAR 7
20000             20000             20000             20000             20000
\$         10.00 \$           10.00 \$           10.00 \$           10.00 \$           10.00
\$    200,000.00 \$      200,000.00 \$      200,000.00 \$      200,000.00 \$      200,000.00
\$ (300,000.00) \$ (300,000.00) \$ (300,000.00) \$ (300,000.00) \$ (300,000.00)
\$    135,000.00   \$    135,000.00   \$    135,000.00   \$    135,000.00   \$    135,000.00
\$   (40,000.00) \$     (40,000.00) \$     (40,000.00) \$ (40,000.00) \$         (40,000.00)
\$     18,000.00   \$     18,000.00   \$     18,000.00   \$     18,000.00   \$     18,000.00
\$      6,750.00   \$      6,750.00   \$      6,750.00   \$      6,750.00   \$           -
\$     19,750.00   \$     19,750.00   \$     19,750.00   \$     19,750.00   \$     13,000.00

\$     19,750.00   \$     19,750.00   \$     19,750.00   \$     19,750.00   \$     13,000.00
13,000.00

\$     19,750.00   \$     19,750.00   \$     19,750.00   \$     19,750.00   \$     13,000.00
```
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