For Capital Outlay For Depreciation

Capital Outlay at EOY 0 -1,000,000 1,000,000

Capital Outlay at EOY 3 -500,000 500,000

Salvage Value of all Capital Expenditure at EOY 8 16,000

Depreciation Rate for Initial Investment 12.5%
Upgrade Depreciates from EOY 4 to EOY 8 100,000
Selling Price Per Unit for EOY 1 to EOY 5 0.5
Selling Price Per Unit for EOY 6 to EOY 8 0.75
Production Cost Per Unit 0.1
Operating Costs for EOY 1 to EOY 5 50,000
Operating Costs for EOY 6 to EOY 8 55,000
Corporate Tax Rate 30%
Sales increase per year from EOY 4 to EOY 8 500,000
Historical (Sales Data) Sales (Units) Sales Forecast Sales (units)
Year Year
1990 500,000 2001 691,106
1991 550,000 2002 707,812
1992 540,000 2003 724,518
1993 560,000 2004 741,224
1994 590,000 2005 757,931
1995 600,000 2006 774,637
1996 610,000 2007 791,343
1997 615,559 2008 808,049
1998 669,000
1999 669,000
2000 700,000
Increased Sales from EOY 4 Working Capital Requirements

691,106 Year
2000
707,812 EOY
20010
724,518 EOY
20021
1,241,224 EOY
20032
1,257,931 EOY
20043
1,274,637 EOY
20054
1,291,343 EOY
20065
1,308,049 EOY
20076
EOY
20087
EOY 8
Level of Working Capital

-2000
-2500
-3100
-3600
-4000
-4300
-4500
-3000
0
 2000 2001 2002 2003 2004 2005
EOY 0 1 2 3 4 5
Cash Outlay -1000000 -500000
WC -2000 -500 -600 -400 -300
Total cash outflow -1000000 -2000 -500 -500600 -400 -300
Forecast sales Unit 691106 707812 724518 741224 757931
Total Units Sold 500000 500000
Selling price/unit 0.5 0.5 0.5 0.5 0.5
Sales Revenue
COST
Production cost p.u. 0.1 0.1 0.1 0.1 0.1
Production cost
Other cost
Depreciation 125000 125000 125000 125000 125000
Depreciation on upgrade 100000 100000
Total Cost
PBT(10-17)
Tax rate 0.3 0.3 0.3 0.3 0.3
Tax
PAT(18-20)
Depreciation 125000 125000 125000 225000 225000
cash flow(21+22)
Salvage value
Tax on sale of asset
WC released
total cash flow
Net cash flow

discount rate 0.05 0.05 0.05 0.05 0.05 0.05

pv for re 1 1 0.95 0.9525 0.952375 0.952381 0.952381
pv
npv
 2006 2007 2008
6 7 8

-200 1500 3000

-200 1500 3000
774637 791343 808049
500000 500000 500000
0.75 0.75 0.75

0.1 0.1 0.1

125000 125000 125000

100000 100000 100000

0.3 0.3 0.3

225000 225000 225000

16000
-4800 Book Value of Asset:
1500 3000 Cost - accumulated depreciation = 0
Profit from sales of asset = selling value -
book value
TAX on SALES OF ASSET = 4800

0.05 0.05 0.05

0.952381 0.952381 0.952381
 2000 2001 2002 2003 2004
EOY 0 EOY 1 EOY 2 EOY 3 EOY 4
Capital Outlay -1,000,000 - - -500,000 -

Working Capital Outlay -2000 -500 -600 -500 -400

Sales Revenue - 345,553 353,906 362,259 620,612

Production Cost - 69,111 70,781 72,452 124,122

Operating Costs - 50,000 50,000 50,000 50,000

Depreciation - 125,000 109,375 95,703 183,740

Profit Before Tax (PBT) - 101,442 123,750 144,104 262,749

Tax - 30,433 37,125 43,231 78,825

Profit After Tax (PAT) - 71,010 86,625 100,873 183,925

Depreciation to be added back - 125,000 109,375 95,703 183,740

Cash Flows After Tax (CFAT) - 196,010 196,000 196,576 367,665

Terminal Cash Flows

Salvage Value - - - - -

Working Capital Released - - - - -

Tax Saving on STCL - - - - -

Cash Flows After Tax (CFAT) - 196,010 196,000 196,576 367,665

2005 2006 2007 2008
EOY 5 EOY 6 EOY 7 EOY 8
- - - -

-300 -200 1500 -

628,966 955,978 968,507 981,037

125,793 127,464 129,134 130,805

50,000 55,000 55,000 55,000

173,273 164,114 156,099 -

279,900 609,400 628,274 795,232

83,970 182,820 188,482 238,570

195,930 426,580 439,791 556,662

173,273 164,114 156,099 -

369,202 590,694 595,891 556,662

- - - 16,000

- - - 3000

- - - 143,009

369,202 590,694 595,891 718,671

Depreciation

Depreciation on initial investment @ 12.5% on WDV

Value at the beginning of Year 1 1,000,000

- Depreciation 125,000
Value at the end of Year 1 875,000

Value at the beginning of Year 2 875,000

- Depreciation 109,375
Value at the end of Year 2 765,625

Value at the beginning of Year 3 765,625

- Depreciation 95,703
Value at the end of Year 3 669,922

Value at the beginning of Year 4 669,922

- Depreciation 83,740
Value at the end of Year 4 586,182

Value at the beginning of Year 5 586,182

- Depreciation 73,273
Value at the end of Year 5 512,909

Value at the beginning of Year 6 512,909

- Depreciation 64,114
Value at the end of Year 6 448,795

Value at the beginning of Year 7 448,795

- Depreciation 56,099
Value at the end of Year 7 392,696

Value at the beginning of Year 8 392,696

- Depreciation 49,087
Value at the end of Year 8 343,609
Depreciation on additional investment Total Depreciation Charged Per Year

Value at the beginning of Year 4 500,000 2001 (EOY 1)

- Depreciation 100,000 2002 (EOY 2)
Value at the end of Year 4 400,000 2003 (EOY 3)
2004 (EOY 4)
Value at the beginning of Year 5 400,000 2005 (EOY 5)
- Depreciation 100,000 2006 (EOY 6)
Value at the end of Year 5 300,000 2007 (EOY 7)
2008 (EOY 8)
Value at the beginning of Year 6 300,000
- Depreciation 100,000
Value at the end of Year 6 200,000

Value at the beginning of Year 7 200,000

- Depreciation 100,000
Value at the end of Year 7 100,000

Value at the beginning of Year 8 100,000

- Depreciation 100,000
Value at the end of Year 8 0
125,000
109,375
95,703
183,740
173,273
164,114
156,099
149,087
Loss on Sale of Asset/Capital Expenditure

Value of initial investment at the beginning of 8 Year 392,696

Value of additional investment at the beginning of 8 Year 100,000

Value of Total Capital Expenditure at the beginning of 8 Year 492,696

-Salvage Value of the total capital expenditure at the end of 8 year 16,000

STCL on Loss on Sale of Asset/Capital Expenditure 476,696

Tax Saved on STCL 143,009

Working Capital Released

Level of Working Capital for each Year

2000 (EOY 0) -2000

2001 (EOY 1) -2500
2002 (EOY 2) -3100
2003 (EOY 3) -3600
2004 (EOY 4) -4000
2005 (EOY 5) -4300
2006 (EOY 6) -4500
2007 (EOY 7) -3000
2008 (EOY 8) 0
Net Working Capital Added each year (Absoulte)

2000
500
600
500
400
300
200
-1500
-3000

Working Capital Released after EOY 8 3000