# Capital Budgeting Analysis with Excel Model

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

DOCUMENT INFO
Shared By:
Categories:
Stats:
 views: 12905 posted: 11/24/2009 language: Latin pages: 1
Description: This Capital Budgeting Analysis is a spreadsheet that should be used by business managers to evaluate whether new capital assets are worth investing in. Capital budgeting is the process of determining the impact of a project's cash inflows and outflows on a firm's value. Different approaches are applied in selecting the projects; they include pay-back period, profitability index, internal rate of return, and net present value. This spreadsheet should be used by company managers to determine which projects and capital expenditures will yield the highest levels of return over a given period of time.
This document is also part of a package Financial Models Bundle 7 Documents Included