Hola Cola case

(in millions os dollars)

Year 0
Revenues
COGS
Gross profit
Depreciation
SG&A expense
Labor & energy
Fixed costs
OC
EBIT
1-T
NOPAT
Depreciation
OCF
Receivables
Payables
Inventory
Working Capital
Change in working capital
Capex
Cannibalization
FCF
NPV
IRR
Payback period

Year 1
0
0
0
0
0
0
0
0
0
0
0
0
0
4.5
-1.332
1.08
4.248
-4.248
-50
0
-54.248

36
-13.32
22.68
-10
-0.3
-2.76
-3.06
-0.06
9.56
0.7
6.692
-10
16.692
4.5
-1.332
1.08
4.248
0
0
-0.8
15.892

($1.7205313)
16.8555%
3.4135 (3 yrs and 5 months approx.)

Sensitivity analysis
NPV
Sales volume

($1.7205313)
0.4
0.41
0.42
0.43
0.44
0.45
0.46
0.47
0.48
0.49
0.5

0.51
0.52
0.53
0.54
0.55
0.56
0.57
0.58
0.59
0.6
0.61
0.62
0.63
0.64
0.65
0.66
0.67
0.68
0.69
0.7
0.71
0.72
0.73
0.74
0.75
0.76
0.77
0.78
0.79
0.8
NPV is 0 when sales is

0.6132

Year 2

Year 3
36
-13.32
22.68
-10
-0.3
-2.76
-3.06
-0.06
9.56
0.7
6.692
-10
16.692
4.5
-1.332
1.08
4.248
0
0
-0.8
15.892

Year 4
36
-13.32
22.68
-10
-0.3
-2.76
-3.06
-0.06
9.56
0.7
6.692
-10
16.692
4.5
-1.332
1.08
4.248
0
0
-0.8
15.892

s and 5 months approx.)

NPV
Price

###
2
2.2
2.4
2.6
2.8
3
3.2
3.4
3.6
3.8
4

36
-13.32
22.68
-10
-0.3
-2.76
-3.06
-0.06
9.56
0.7
6.692
-10
16.692
4.5
-1.332
1.08
4.248
0
0
-0.8
15.892

4.2
4.4
4.6
4.8
5
5.2
5.4
5.6
5.8
6
6.2
6.4
6.6
6.8
7
7.2
7.4
7.6
7.8
8
NPV is 0 when price is

5.1097

Year 5
36
-13.32
22.68
-10
-0.3
-2.76
-3.06
-0.06
9.56
0.7
6.692
-10
16.692
0
0
0
0
4.248
2.8
-0.8
22.94

###
0.2
0.25
0.3
0.35
0.4
0.45
0.5
0.55
0.6
0.65
0.7

30%

Receivables
Payables

4.5
1.11

wacc

NPV
Cannibalization

Tax

18.2%

0.75
0.8
0.85
0.9
0.95
1
1.05
1.1
1.15
1.2
1.25
1.3
1.35
1.4
1.45
1.5
1.55
1.6
1.65
1.7
NPV is 0 when cannibalization is

0.2473

Sales volume
Price
Cannibalization
Raw materials
OH costs
COGS

0.6
5
0.8
12.96
0.36
13.32