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    Team 3 - NO-SOLUTIONS-INVESTMENT-DECISIONS-2-CONCH-PART1

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    Meriam Haoues
    This document summarizes financial information for a company that produces new and old phone models. It provides sales, costs, profits, cash flows, and other metrics for years 1-5. Key metrics show a payback period of 2.33 years, profitability index of 1.858, and net present value of $37.3 million, indicating the project is financially viable.

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    © All Rights Reserved
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    Team 3 - NO-SOLUTIONS-INVESTMENT-DECISIONS-2-CONCH-PART1

    Uploaded by

    Meriam Haoues
    33 views6 pages
    This document summarizes financial information for a company that produces new and old phone models. It provides sales, costs, profits, cash flows, and other metrics for years 1-5. Key metrics show a payback period of 2.33 years, profitability index of 1.858, and net present value of $37.3 million, indicating the project is financially viable.

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    Team 3- NO-SOLUTIONS-INVESTMENT-DECISIONS-2-CONCH-PART1 (1)

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    This document summarizes financial information for a company that produces new and old phone models. It provides sales, costs, profits, cash flows, and other metrics for years 1-5. Key metrics show a payback period of 2.33 years, profitability index of 1.858, and net present value of $37.3 million, indicating the project is financially viable.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    33 views6 pages

    Team 3 - NO-SOLUTIONS-INVESTMENT-DECISIONS-2-CONCH-PART1

    Uploaded by

    Meriam Haoues
    This document summarizes financial information for a company that produces new and old phone models. It provides sales, costs, profits, cash flows, and other metrics for years 1-5. Key metrics show a payback period of 2.33 years, profitability index of 1.858, and net present value of $37.3 million, indicating the project is financially viable.

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    © All Rights Reserved
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    You are on page 1of 6

    Conch Republic Electronics, Part 1

    Input Area:

    Equipment $ 43,500,000
    Salvage value $ 6,500,000
    R&D $ 750,000 sunk cost
    Marketing study $ 200,000 sunk cost

    Year 1 Year 2
    Sales(units) 155,000 165,000
    Depreciation rate 14.29% 24.49%
    Sales of old phone 95,000 65,000
    Lost sales 30,000 30,000

    Price $ 535
    VC $ 220
    FC $ 6,400,000
    Price of old phone $ 385
    Revised price
    of old phone $ 215
    VC of old phone $ 145
    Tax rate 21%
    NWC percentage 20%
    Required return 12%

    Output Area:

    Old phone price reduction $ 170

    Sales Year 1 Year 2


    New $82,925,000 $88,275,000
    Lost sales (11,550,000) (11,550,000)
    Lost rev. (11,050,000) (5,950,000)
    Net sales $60,325,000 $70,775,000

    VC
    New $34,100,000 $36,300,000
    Lost sales (4,350,000) (4,350,000)
    $29,750,000 $31,950,000
    Sales $60,325,000 $70,775,000
    VC 29,750,000 31,950,000
    Fixed costs 6,400,000 6,400,000
    Dep 6,216,150 10,653,150
    EBT $17,958,850 $21,771,850
    Tax 3,771,359 4,572,089
    NI $14,187,492 $17,199,762
    +Dep 6,216,150 10,653,150
    OCF $20,403,642 $27,852,912

    NWC
    Beg $0 $12,065,000
    End 12,065,000 14,155,000
    NWC CF $12,065,000 $2,090,000

    Net CF $8,338,642 $25,762,912

    Salvage $ 6,500,000
    BV of equipment $ 9,704,850
    Taxes (673,019)
    Salvage CF $ 7,173,019

    Net CF Time
    0 $ (43,500,000)
    1 $8,338,642
    2 $25,762,912
    3 $28,427,962
    4 $22,935,712
    5 $31,761,524

    Payback period (*) 2.331


    PI 1.858
    IRR 37.51%
    NPV $37,316,113.42
    Year 3 Year 4 Year 5
    125,000 95,000 75,000
    17.49% 12.49% 8.93%

    Year 3 Year 4 Year 5


    $66,875,000 $50,825,000 $40,125,000

    0 0 0
    $66,875,000 $50,825,000 $40,125,000

    $27,500,000 $20,900,000 $16,500,000


    0 0 0
    $27,500,000 $20,900,000 $16,500,000
    $66,875,000 $50,825,000 $40,125,000
    27,500,000 20,900,000 16,500,000
    6,400,000 6,400,000 6,400,000
    7,608,150 5,433,150 3,884,550
    $25,366,850 $18,091,850 $13,340,450
    5,327,039 3,799,289 2,801,495
    $20,039,812 $14,292,562 $10,538,956
    7,608,150 5,433,150 3,884,550
    $27,647,962 $19,725,712 $14,423,506

    $14,155,000 $13,375,000 $10,165,000


    13,375,000 10,165,000
    ($780,000) ($3,210,000) ($10,165,000)

    $28,427,962 $22,935,712 $24,588,506

    Discounted Payback (*) : 2.767

    (*) Please see sheet Calculation


    Time period: 0 1 2 3 4
    Cash flow: (43,500,000) 8,338,642 25,762,912 28,427,962 22,935,712
    Cumulative cash flow: (43,500,000) (35,161,359) (9,398,447) 19,029,515 41,965,226
    Logical test: 0 0 0 1 0
    0.00 0.00 2.331 0.00
    Max Row 93=Payback: 2.33

    Time period: 0 1 2 3 4
    Cash flow: (43,500,000) 8,338,642 25,762,912 28,427,962 22,935,712
    Disc. cash flow: (43,500,000) 7,445,216 20,538,035 20,234,461 14,576,059
    Disc. cum. cash flow: (43,500,000) (36,054,784) (15,516,749) 4,717,712 19,293,772

    Discounted Payback: 2.77


    5
    $31,761,524
    73,726,750
    0
    0.00

    5
    $31,761,524
    18,022,342
    37,316,113

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