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