Workings:
INFLATION (1+i)^n
Year 0 1 2 3 4
Production and Sales Unit 300 000,00 410 000,00 525 000,00 220 000,00
Selling Price p/unit 125,00 130,00 140,00 120,00
Inflation @5% (1+0,05)^1 (1+0,05)^2 (1+0,05)^3 (1+0,05)^4
Adjusted Selling Price p/unit 131,25 143,33 162,07 145,86
Revenue 39 375 000,00 58 763 250,00 85 085 437,50 32 089 365,00
Variable Cost p/unit 71,00 71,00 71,00 71,00
Inflation @3,5% (1+0,035)^1 (1+0,035)^2 (1+0,035)^3 (1+0,035)^4
Adjusted Variable Cost p/unit 73,49 76,06 78,72 81,47
Variable Cost 22 045 500,00 31 183 359,75 41 327 458,79 17 924 309,27
Fixed Cost 3 000 000,00 3 100 000,00 3 200 000,00 3 000 000,00
Inflation @6% (1+0,06)^1 (1+0,06)^2 (1+0,06)^3 (1+0,06)^4
Fixed Cost adjusted (3 180 000,00) (3 483 160,00) (3 811 251,20) (3 787 430,88)
Tax Calculation
Cash flow before tax R14 149 500,00 R24 096 730,25 R39 946 727,51 R10 377 624,85
Recoupment/Capital gain on asset
disposal R0,00 R0,00 R0,00 R0,00
Other Capital Gain/loss R0,00 R0,00 R0,00 R0,00
Taxable Cash flow R14 149 500,00 R24 096 730,25 R39 946 727,51 R10 377 624,85
tax @26% (R3 678 870,00) (R6 265 149,87) (R10 386 149,15) (R2 698 182,46)
Recoupment (capital gain/loss on
disposal
Cost R 20 000 000,00
Depreciation (Capital Allowance) R (20 000 000,00) R 5 000 000,00 R 5 000 000,00 R 5 000 000,00 R 5 000 000,00
Tax Value R -
Residual Value/Scrap Value R -
Recoupment (capital gain/loss) R -
Tax Benefits (Capital allowance)
Cost R 20 000 000,00
Depreciation (Capital Allowance) R (20 000 000,00) R 5 000 000,00 R 5 000 000,00 R 5 000 000,00 R 5 000 000,00
Tax Benefits @26% R 1 300 000,00 R 1 300 000,00 R 1 300 000,00 R 1 300 000,00
NPV
Year 0 1 2 3 4
Revenue 39 375 000,00 58 763 250,00 85 085 437,50 32 089 365,00
Variable Cost (22 045 500,00) (31 183 359,75) (41 327 458,79) (17 924 309,27)
Contribution Margin 17 329 500,00 27 579 890,25 43 757 978,71 14 165 055,73
Fixed Costs (3 180 000,00) (3 483 160,00) (3 811 251,20) (3 787 430,88)
Cash flow before tax 14 149 500,00 24 096 730,25 39 946 727,51 10 377 624,85
tax @26% (3 678 870,00) (6 265 149,87) (10 386 149,15) (2 698 182,46)
Cash flow after tax R 10 470 630,00 R 17 831 580,39 R 29 560 578,36 R 7 679 442,39
Additonal capital expenditure/income
assets cost -R20 000 000,00
Tax Benefits (capital allowance) R 1 300 000,00 R 1 300 000,00 R 1 300 000,00 R 1 300 000,00
Working capital R0,00 R0,00 R0,00 R0,00 R0,00
residual value/ Scrap Value R0,00 R0,00 R0,00 R0,00
Additional project capital R0,00 R0,00 R0,00 R0,00
Net Cash flow R11 770 630,00 R19 131 580,39 R30 860 578,36 R8 979 442,39
PV Factor @12% R1,00 0,8929 0,7972 0,7118 0,6355
Present Values (R20 000 000,00) R10 509 491,07 R15 251 578,75 R21 965 950,11 R5 706 597,97
Net Present Values R33 433 617,91
BALANCE AFTER
DISCOUNT PB CASH FLOWS RECOVERY RECOVERED
0 (R20 000 000,00) (R20 000 000,00)
1 R 10 509 491,07 (R9 490 508,93) R 10 509 491,07
2 R 15 251 578,75 R5 761 069,82 R9 490 508,93
3 R 21 965 950,11
4 R 5 706 597,97
= 1 Years
7 MONTHS
IRR CASH FLOWS CFj
R (20 000 000,00) 0
R 11 770 630,00 1
R 19 131 580,39 2
R 30 860 578,36 3
R 8 979 442,39 4
COMP IRR 74%