IM&C GUANO PROJECT The following worksheet contains the same information as Tables 6-2 through 6-7 in Brealey-Myers. You can use this worksheet as a template for most capital budgeting problems. Cost of capital Year Depreciation (for taxes) Net working capital Change in net working capital Net property, plant & equipment Sales Less COGS Less depreciation Less other costs EBIT Less taxes @ 35% 20% 0 1 20.00% 550 550 8,000 523 (837) (2,000) (2,200) (4,514) 1,580 (2,934) 2,000 (550) (1,484) (1,484) 83% (1,237) (13,837) 2 32.00% 1,289 739 4,800 12,887 (7,729) (3,200) (1,210) 748 (262) 486 3,200 (739) 2,947 2,947 69% 2,047 (11,790) 3 19.20% 3,261 1,972 2,880 32,610 (19,552) (1,920) (1,331) 9,807 (3,432) 6,375 1,920 (1,972) 6,323 6,323 58% 3,659 (8,131) 4 11.52% 4,890 1,629 1,728 48,901 (29,345) (1,152) (1,464) 16,940 (5,929) 11,011 1,152 (1,629) 10,534 10,534 48% 5,080 (3,051) 5 11.52% 3,583 (1,307) 576 35,834 (21,492) (1,152) (1,611) 11,579 (4,053) 7,526 1,152 1,307 9,985 9,985 40% 4,013 962 6 5.76% 2,002 (1,581) 19,717 (11,830) (576) (1,772) 5,539 (1,939) 3,600 576 1,581 5,757 5,757 33% 1,928 2,890 2,002 2,002 1,949 (682) 3,269 28% 912 3,802 7
(2,002)
10,000
(4,000) (4,000) 1,400
EBIAT (2,600) Plus depreciation Less change in net working capital Cash flow from operations Less capital investment Plus capital disposal Less taxes on capital disposal Net cash flow Present value factor PV of cash flow Cumulative PV Net present value (2,600) (10,000) (12,600) 100% (12,600) (12,600) 3,802