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  • Revenue and Cost Projections for 3 Investment Options

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    Abdullah Ahmed
    256 Ansichten11 Seiten
    This document compares the financial projections of 3 options for a new business venture. Option 1 has an NPV of $3.3 million and IRR of 24%. Option 2 has higher NPV of $5.4 million and IRR of 25%. Option 3 has negative NPV and lowest IRR of 15%. The options are projected over 5 years with estimates for revenue, costs, expenses, taxes, earnings, working capital needs and cash flows.

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    PG Case Calculations Worked

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    This document compares the financial projections of 3 options for a new business venture. Option 1 has an NPV of $3.3 million and IRR of 24%. Option 2 has higher NPV of $5.4 million and IRR of 25%. Option 3 has negative NPV and lowest IRR of 15%. The options are projected over 5 years with estimates for revenue, costs, expenses, taxes, earnings, working capital needs and cash flows.

    Copyright:

    © All Rights Reserved
    Als XLSX, PDF, TXT herunterladen oder online auf Scribd lesen
    Markieren Sie unangemessene Inhalte
    256 Ansichten11 Seiten

    Revenue and Cost Projections for 3 Investment Options

    Hochgeladen von

    Abdullah Ahmed
    This document compares the financial projections of 3 options for a new business venture. Option 1 has an NPV of $3.3 million and IRR of 24%. Option 2 has higher NPV of $5.4 million and IRR of 25%. Option 3 has negative NPV and lowest IRR of 15%. The options are projected over 5 years with estimates for revenue, costs, expenses, taxes, earnings, working capital needs and cash flows.

    Copyright:

    © All Rights Reserved
    Als XLSX, PDF, TXT herunterladen oder online auf Scribd lesen
    Markieren Sie unangemessene Inhalte
    von 11

    OPTION 1

    Operating Revenue
    COGS

    Year 0

    2008

    2,000,000

    Gross Margin
    Expenses
    SDA
    Marketing
    Depreciation
    Development Cost

    4,000,000
    1,500,000

    EBIT
    tax (40%)
    Net earnings

    ###

    Cannibilization

    44,000,000
    24,000,000

    44,000,000
    24,000,000

    20,000,000

    20,000,000

    1,000,000
    2,000,000
    800,000

    ###
    ###
    1,280,000
    -

    16,200,000
    6,480,000

    15,720,000
    6,288,000

    9,720,000

    9,432,000

    23,700,000

    Net working Capital


    Rev/NWC=8
    change

    5,500,000
    5,500,000

    FCF
    NPV
    IRR

    2009

    (5,500,000)
    3,301,624
    0.2363

    (18,680,000)

    5,500,000
    10,712,000

    2010

    2011

    2012
    4,000,000

    44,000,000
    24,000,000

    44,000,000
    24,000,000

    44,000,000
    24,000,000

    20,000,000

    20,000,000

    20,000,000

    1,000,000
    2,000,000
    768,000
    -

    1,000,000
    2,000,000
    460,800
    -

    1,000,000
    2,000,000
    460,800
    -

    16,232,000
    6,492,800

    16,539,200
    6,615,680

    16,539,200
    6,615,680

    9,739,200

    9,923,520

    9,923,520

    5,500,000
    -

    5,500,000
    -

    5,500,000
    -

    10,507,200

    10,384,320

    10,384,320

    Depreciation
    0.20

    0.32

    0.19

    0.12

    0.12

    OPTION 2
    Operating Revenue
    COGS

    Year 0

    2008

    3,250,000

    Gross Margin
    Expenses
    SDA
    Marketing
    Depreciation
    Development Cost

    4,000,000
    1,500,000

    EBIT
    tax (40%)
    Net earnings

    ###

    Cannibilization

    68,250,000
    39,000,000

    68,250,000
    39,000,000

    29,250,000

    29,250,000

    1,000,000
    3,500,000
    800,000

    ###
    ###
    1,280,000
    -

    23,950,000
    9,580,000

    23,470,000
    9,388,000

    14,370,000

    14,082,000

    38,512,500

    Net working Capital


    Rev/NWC=8
    change

    8,531,250
    5,500,000

    FCF
    NPV
    IRR

    2009

    (5,500,000)
    5,441,948
    0.2519

    (28,842,500)

    8,531,250
    15,362,000

    2010

    2011

    2012
    4,000,000

    68,250,000
    39,000,000

    68,250,000
    39,000,000

    68,250,000
    39,000,000

    29,250,000

    29,250,000

    29,250,000

    1,000,000
    3,500,000
    768,000
    -

    1,000,000
    3,500,000
    460,800
    -

    1,000,000
    3,500,000
    460,800
    -

    23,982,000
    9,592,800

    24,289,200
    9,715,680

    24,289,200
    9,715,680

    14,389,200

    14,573,520

    14,573,520

    8,531,250
    -

    8,531,250
    -

    8,531,250
    -

    15,157,200

    15,034,320

    15,034,320

    Depreciation
    0.20

    0.32

    0.19

    0.12

    0.12

    OPTION 3
    Operating Revenue
    COGS

    Year 0

    2008

    1,000,000

    Gross Margin
    Expenses
    SDA
    Marketing
    Depreciation
    Development Cost

    4,000,000
    1,500,000

    EBIT
    tax (40%)
    Net earnings

    ###

    Cannibilization

    23,000,000
    12,000,000

    23,000,000
    12,000,000

    11,000,000

    11,000,000

    1,000,000
    1,000,000
    800,000

    ###
    ###
    1,280,000
    -

    8,200,000
    3,280,000

    7,720,000
    3,088,000

    4,920,000

    4,632,000

    10,050,000

    Net working Capital


    Rev/NWC=8
    change
    FCF
    NPV
    IRR

    2009

    (5,500,000)
    (128,875)
    0.1544

    2,875,000
    5,500,000

    2,875,000
    -

    (9,830,000)

    5,912,000

    2010

    2011

    2012
    4,000,000

    23,000,000
    12,000,000

    23,000,000
    12,000,000

    23,000,000
    12,000,000

    11,000,000

    11,000,000

    11,000,000

    1,000,000
    1,000,000
    768,000
    -

    1,000,000
    1,000,000
    460,800
    -

    1,000,000
    1,000,000
    460,800
    -

    8,232,000
    3,292,800

    8,539,200
    3,415,680

    8,539,200
    3,415,680

    4,939,200

    5,123,520

    5,123,520

    2,875,000
    -

    2,875,000
    -

    2,875,000
    -

    5,707,200

    5,584,320

    5,584,320

    Depreciation
    0.20

    0.32

    0.19

    0.12

    0.12

    OPTION 1
    NPV
    IRR

    OPTION 2

    3,301,623.58
    24%

    5,441,947.96
    25%

    OPTION 3
    (128,874.90)
    15%

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