Data Section

Data Section

Cash Outflows/Change in Depreciation

Cash Outflows/Change in Depreciation

Cash Inflows

Cash Inflows

T-Account of Cash Flows/MIRR

T-Account of Cash Flows/MIRR

Interpolation for IRR Calculations

Interpolation for IRR Calculations

Payback Period

Payback Period

Summary

Summary

Cash Outflows (2nd)/Chg. In Depreciation (2nd)

Cash Inflows
T-Account of Cash Flows/MIRR
Replacement Chains

Data Section for 2nd Proposal

2nd Proposal

2nd Proposal

Data Section for 2nd Proposal

Cash Outflows/Change in Depreciation (2nd)

Cash Inflows (2nd)
T-Account of Cash Flows/MIRR (2nd)
Replacement Chains

NPV Profile Chart

NPV Profile Chart

Cash Flow Chart

Cash Flow Chart

hange in Depreciation

IRR Calculations

n for 2nd Proposal

ws/Change in Depreciation (2nd)

f Cash Flows/MIRR (2nd)

SUMMARY SECTION
Net Present Value
P.V. of Benefits - P.V. of Costs = Net Present Value
$36,237
30,625

$5,612

The benefits exceed the costs. You should BUY the asset.
Internal Rate of Return
Internal Rate of Return =

20.58%

The IRR of 20.58% is greater than the discount rate (or required rate of return) of 12.0%.
You should BUY the asset.
Modified Internal Rate of Return
Modified Internal Rate of Return =

16.81%

The MIRR of 16.81% is greater than the discount rate (or required rate of return) of 12.0%.
You should BUY the asset.
Payback Period
Payback Period =
You should buy the asset only if the firm's minimum desired
payback period is 2.51 years or greater.

2.51 years

CASH OUTFLOWS
(0)

Cost of New Asset

Shipping
Working Capital
Sale Proceeds
Tax on Sale of Old Asset

P.V. OF COSTS =

Net Present Value =

Internal Rate of Return =
Modified Internal Rate of Return =

CASH OUTFLOWS
(0)

Cost of New Asset

Shipping
Working Capital
Sale Proceeds
Tax on Sale of Old Asset

P.V. OF COSTS =

Modified Internal Rate of Return =

(2nd Proposal)
@
12%

CASH INFLOWS
PVF =
PVB
$701,391
(1)
0.893 =
$231,690
4,000
(2)
0.797 =
191,372
6,500
(3)
0.712 =
103,166
(8,000)
(4)
0.636 =
68,776
(11,375)
(5)
0.567 =
59,012
(6)
0.000 =
0
(7)
0.000 =
0
(8)
0.000 =
0
(9)
0.000 =
0
(10)
0.000 =
0
_________
_________
$692,516
P.V. OF BENEFITS =
$654,017
SUMMARY OF FINDINGS
Cash Flow
$259,493
240,057
144,941
108,221
104,000
0
0
0
0
0

($38,499)
9.26%
10.73%

x
x
x
x
x
x
x
x
x
x
x

Profitability Index =
Payback Period (yrs) =

0.94
3.44

MODIFIED INTERNAL RATE OF RETURN

@
12%
CASH INFLOWS
Cash Flow x
FVF =
Future Value
$701,391
(1)
259,493
x
1.574 =
$408,317
$4,000
(2)
240,057
x
1.405 =
337,262
$6,500
(3)
144,941
x
1.254 =
181,814
($8,000)
(4)
108,221
x
1.120 =
121,207
($11,375)
(5)
104,000
x
1.000 =
104,000
(6)
0
x
0.000 =
0
(7)
0
x
0.000 =
0
(8)
0
x
0.000 =
0
(9)
0
x
0.000 =
0
(10)
0
x
0.000 =
0
_________
_________
$692,516
P.V. OF BENEFITS =
$1,152,601
SCRATCHSHEET AREA
Year
Equiv. CF
Yrs. of Reinvestment
10.73%
0
($692,516)
1
0
4
2
0
3
3
0
2
4
0
1
5
1,152,601
0
6
0
0
7
0
0
8
0
0
9
0
0
10
0
0

Proposal A
CASH OUTFLOWS
(0)

Cost of New Asset

Shipping
Working Capital
Sale Proceeds
Tax on Sale of Old Asset

P.V. OF COSTS =

@
$50,000
0
0
(8,000)
(11,375)

12%
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(4)
(8)
(12)
(16)

$30,625
Net Present Value =

CASH INFLOWS
12,157
x
12,530
x
11,542
x
11,296
x
0
x
0
x
0
x
0
x
0
x
0
x
5,612
x
5,612
x
5,612
x
5,612
x
P.V. OF BENEFITS =

0.893
0.797
0.712
0.636
0.000
0.000
0.000
0.000
0.000
0.000
0.636
0.404
0.257
0.163

=
=
=
=
=
=
=
=
=
=
=
=
=
=

$10,855
9,989
8,215
7,179
0
0
0
0
0
0
3,567
2,267
1,441
916
$44,427

$13,802

Proposal A should be accepted

Proposal B
CASH OUTFLOWS
(0)

Cost of New Asset

Shipping
Working Capital
Sale Proceeds
Tax on Sale of Old Asset

P.V. OF COSTS =

@
$701,391
4,000
6,500
(8,000)
(11,375)

$692,516
Net Present Value =

12%
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(5)
(10)
(15)
0

CASH INFLOWS
$259,493
x
240,057
x
144,941
x
108,221
x
104,000
x
0
x
0
x
0
x
0
x
0
x
(38,499) x
(38,499) x
(38,499) x
0
x
P.V. OF BENEFITS =

($79,773)

0.893
0.797
0.712
0.636
0.567
0.000
0.000
0.000
0.000
0.000
0.567
0.322
0.183
0.000

=
=
=
=
=
=
=
=
=
=
=
=
=
=

$231,690
191,372
103,166
68,776
59,012
0
0
0
0
0
(21,845)
(12,396)
(7,034)
0
$612,742

Net Present Value Profile

$4,000

$3,000

$2,000

Net Present Value

$1,000

$0
0.00%

5.00%

10.00%

15.00%

($1,000)

($2,000)

($3,000)

($4,000)
Discount Rate

20.00%

25.00%

30.00%

Cash Flows of the Project

15,000

12,157

12,530

11,542

11,296

10,000
5,000
0

0
(5,000)
(10,000)
(15,000)
(20,000)
(25,000)
(30,000)

(30,625)

(35,000)
1

6
Year

10

11