Infomercial Entertainment, INC Pro

Infomercial Project

Selling Price of Infomercial($)

Total Production of 1993 (Units)
Production Cost (%age of SP)
Labor Cost (%age of SP)
Sales Growth Rate per Year
Working Capital Required($)
Initial Cost of Equipment($)
Delievery Cost($)
Total Cost of Equipment
Equipment Scrap Value
Tax

10
5000
50%
12%
5%
10,000
200,000
25,000
$225,000
$20,000
35%

Official Year
Project Year
Production
Sales
Less Production Cost
Less Labor Cost
Less Deprecition
Net Income
Taxes
NOPAT

1993
1
5,000
50,000
25,000
6,000
45,000
-26,000
-9,100
-16,900

1994
2
5,250
52,500
26,250
6,300
72,000
-52,050
-18,218
-33,833

1995
3
5,513
55,125
27,563
6,615
42,750
-21,803
-7,631
-14,172

FREE CASH FLOWS

NOPAT
Add Depreciation
Free Cash Flows for the year

-16,900
45,000
28,100

-33,833
72,000
38,168

-14,172
42,750
28,578

28,100
206,900

38,168
168,733

28,578
140,154

Undiscounted Payback Period

Initial Investment
Investment recovered
Investment Left

1992
0

235,000

Infomercia

Training Video Project

Selling Price($)
Total Demand of 1993 (Units)
Production Cost (%age of SP)
OverHeads (%age of SP)
Sales Growth Rate per Year

8
4375
43%
10%
7%

Working Capital Required($)

Initial Cost of Equipment
Delievery Cost
Total Cost of Equipment
Equipment Scrap Value($)

5,000
$200,000
$25,000
$225,000
20,000

TAX

35%

Official Year
Project Year

1992
0

Production
Sales
Less Production Cost
Less Overheads
Less Deprecition
Net Income
Taxes
NOPAT

1993
1
4,375
35,000
15,050
3,500
45,000
-28,550
-9,993
-18,558

FREE CASH FLOWS

NOPAT
Add Depreciation
Free Cash Flows for the year

-18,558
45,000
26,443

Undiscounted Payback Period

Initial Investment
Investment recovered
Investment Left

235,000
26,443
208,558

Infomercial E

Combined Project
Official Year
Project Year

1992
0

1993
1

Sales
Less Production Cost
Less Labor Cost
Less Deprecition
Net Income
Taxes
NOPAT

85,000
40050
9500
45000
-9550
-3343
-6,207

FREE CASH FLOWS

NOPAT
Add Depreciation
Free Cash Flows for the year

-6207
45000
38,793

Undiscounted Payback Period

Initial Investment
Investment recovered
Investment Left

235,000
38793
196,207

PAYBACK PERIOD
No. of Years
10
10
6

Infomercial
Training
Combined

NPV Calculations
Official Year
Project Year

1992
0

1993
1

1994
2

1995
3

38,168
0
0
38,168

28,578
0
0
28,578

Infomercial Project
Cash Flows
Working Capital Requirement
Recovery of Working Capital
Total Cash Flow

-225,000
-10,000
0
-235,000

NPV

28,100
0
0
28,100

-73,364

Training Video Project

Cash Flows
Working Capital Requirement
Recovery of Working Capital
Total Cash Flow

NPV

-225,000
-5,000
0
-230,000

26442.5
0
0
26442.5

-87121

36640.975 27204.3433
0
0
0
0
36640.975 27204.3433

NPV

-87121
Combined Project

Cash Flows
Working Capital Requirement
Recovery of Working Capital
Total Cash Flow

NPV

-225,000
-15,000
0
-240,000

38,793
0
0
38,793

9,666

49,608
0
0
49,608

40,820
0
0
40,820

inment, INC Project Appraisals

Depreciation Rates of MACRS
Recovery Percentage
Year
20%
1
32%
2
19%
3
12%
4
11%
5
6%
6

1996
4
5,788
57,881
28,941
6,946
27,000
-5,005
-1,752
-3,253

1997
5
6,078
60,775
30,388
7,293
24,750
-1,655
-579
-1,076

1998
6
6,381
63,814
31,907
7,658
13,500
10,749
3,762
6,987

1999
7
6,700
67,005
33,502
8,041
0
25,462
8,912
16,550

2000
8
7,036
70,355
35,178
8,443
0
26,735
9,357
17,378

2001
9
7,387
73,873
36,936
8,865
0
28,072
9,825
18,247

2002
10
7,757
77,566
38,783
9,308
0
29,475
10,316
42,158.75

-3,253
27,000
23,747

-1,076
24,750
23,674

6,987
13,500
20,487

16,550
0
16,550

17,378
0
17,378

18,247
0
18,247

42,159
0
42,159

23,747
116,408

23,674
92,733

20,487
72,247

16,550
55,696

17,378
38,319

18,247
20,072

42,159
-22,087

Infomercial Entertainment, INC Project Appraisa

ideo Project

Dep

Year
1
2
3
4
5

Book Value
Salvage value
Additional Income

1993
1
4,375
35,000
15,050
3,500
45,000
-28,550
-9,993
-18,558

1994
2
4,681
37,450
16,104
3,745
72,000
-54,399
-19,039
-35,359

1995
3
5,009
40,072
17,231
4,007
42,750
-23,916
-8,371
-15,546

1996
4
5,360
42,877
18,437
4,288
27,000
-6,848
-2,397
-4,451

1997
5
5,735
45,878
19,727
4,588
24,750
-3,187
-1,116
-2,072

-18,558
45,000
26,443

-35,359
72,000
36,641

-15,546
42,750
27,204

-4,451
27,000
22,549

-2,072
24,750
22,678

26,443
208,558

36,641
171,917

27,204
144,712

22,549
122,163

22,678
99,485

Infomercial Entertainment, INC Project Appraisals

Project

1994
2

1995
3
89950
42354
10045
72000
-34449
-12057
-22,392

95197
44793
10622
42750
-2969
-1039
-1,930

1996
4
100758
47378
11233
27000
15147
5301
9,845

-22392
72000
49,608

-1930
42750
40,820

9845
27000
36,845

1997
5
106653
50115
11881
24750
19907
6968
12,940

12940
24750
37,690

49608
146,599

40820
105,779

36845
68,934

37690
31,244

ERIOD

DISCOUNT RATE =10%

12%

ions
1996
4

1997
5

1998
6

1999
7

2000
8

2001
9

2002
10

23,747
0
0
23,747

23,674
0
0
23,674

20,487
0
0
20,487

16,550
0
0
16,550

17,378
0
0
17,378

18,247
0
0
18,247

19,159
0
10,000
42,159

IRR

22548.772
0
0
22548.772

IRR

1.73%

22678.18634 19721.78 16046.56 17169.82 18371.71

0
0
0
0
0
0
0
0
0
0
22678.18634 19721.78 16046.56 17169.82 18371.71

1.17%

37657.72513
0
5,000
37657.72513

IRR
36,845
0
0
36,845

IRR

37,690
0
0
37,690

10.92%

35,484
0
0
35,484

32,597
0
0
32,597

34,548
0
0
34,548

36,618
0
0
36,618

66,817
0
15,000
66,817

roject Appraisals
Year
1
2
3
4
5

Depreciation Rates of MACRS

Recovery Percentage
20%
32%
19%
12%
11%

6%

Book Value
Salvage value
Additional Income

0
20000
13000

1997
5
5,735
45,878
19,727
4,588
24,750
-3,187
-1,116
-2,072

1998
6
6,136
49,089
21,108
4,909
13,500
9,572
3,350
6,222

1999
7
6,566
52,526
22,586
5,253
0
24,687
8,640
16,047

2000
8
7,025
56,202
24,167
5,620
0
26,415
9,245
17,170

2001
9
7,517
60,137
25,859
6,014
0
28,264
9,892
18,372

-2,072
24,750
22,678

6,222
13,500
19,722

16,047
0
16,047

17,170
0
17,170

18,372
0
18,372

22,678
99,485

19,722
79,763

16,047
63,717

17,170
46,547

18,372
28,175

ject Appraisals
1998
6
112903
53015
12567
13500
33821
11837
21,984

1999
7
119530
56088
13293
0
50149
17552
32,597

2000
8
126557
59345
14063
0
53150
18603
34,548

2001
9
134009
62795
14878
0
56336
19718
36,618

2002
10
141912
66452
15743
0
59718
20901
66,817

21984
13500
35,484

32597
0
32,597

34548
0
34,548

36618
0
36,618

66,817
0
66,817

35484

32597

34548

36618

66,817

2002
10
8,043
64,346
27,669
6,435
0
30,243
10,585
37,658

37,658
0
37,658

37,658
-9,482

2002
10
141912
66452
15743
0
59718
20901
66,817

66,817
0
66,817

66,817