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  • Assignment 1

    Hochgeladen von

    Sriram Rajasekaran
    102 Ansichten27 Seiten
    The document provides financial projections for a new product over 4 years on a quarterly basis. It includes details of development costs, estimated timelines, pilot testing costs, ramp up costs, marketing costs, projected sales volumes, unit production costs, unit prices and interest rates. The highest NPV of over $10 million is achieved when the annual sales volume is 70,000 units and interest rate is 8%. Increasing sales volumes and decreasing interest rates positively impacts the project NPV, while decreasing sales volumes and increasing interest rates reduces the project NPV.

    Originalbeschreibung:

    quantitative analysis

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    The document provides financial projections for a new product over 4 years on a quarterly basis. It includes details of development costs, estimated timelines, pilot testing costs, ramp up costs, marketing costs, projected sales volumes, unit production costs, unit prices and interest rates. The highest NPV of over $10 million is achieved when the annual sales volume is 70,000 units and interest rate is 8%. Increasing sales volumes and decreasing interest rates positively impacts the project NPV, while decreasing sales volumes and increasing interest rates reduces the project NPV.

    Copyright:

    © All Rights Reserved
    Als XLSX, PDF, TXT herunterladen oder online auf Scribd lesen
    Markieren Sie unangemessene Inhalte
    102 Ansichten27 Seiten

    Assignment 1

    Hochgeladen von

    Sriram Rajasekaran
    The document provides financial projections for a new product over 4 years on a quarterly basis. It includes details of development costs, estimated timelines, pilot testing costs, ramp up costs, marketing costs, projected sales volumes, unit production costs, unit prices and interest rates. The highest NPV of over $10 million is achieved when the annual sales volume is 70,000 units and interest rate is 8%. Increasing sales volumes and decreasing interest rates positively impacts the project NPV, while decreasing sales volumes and increasing interest rates reduces the project NPV.

    Copyright:

    © All Rights Reserved
    Als XLSX, PDF, TXT herunterladen oder online auf Scribd lesen
    Markieren Sie unangemessene Inhalte
    von 27

    Development cost

    Estimated devp time


    Pilot testing
    Ramp up cost
    marketing and support cost
    sales and production volume
    unit production cost
    unit price
    interest rate

    1000000
    9 months
    200000
    400000
    150000 per yr
    60000 per yr
    100
    170
    8%

    Project Schdule

    Year 1
    Q1
    Q2
    -333333.33 -333333.33

    Development cost
    Pilot testing
    Ramp up cost
    marketing and support cost
    sales and production volume
    Unit production cost
    Total production costs
    sales and production volume
    Unit price
    Sales Revenue
    Period cash flow
    PV (Quarterly cash fows)
    PV(Annual cash flows)
    Project NPV

    2% p.qtr
    8% p.a
    8,503,043

    0
    1
    -333333.33 -333333.33
    -333333.33 -326797.39
    -1586904.73498127

    Year 1
    Year 2
    Q3
    Q4
    Q1
    Q2
    Q3
    Q4
    Q1
    -333333.33
    -100000
    -100000
    -200000
    -200000
    -37500
    -37500
    -37500
    -37500
    -37500
    -37500
    15000
    15000
    15000
    15000
    15000
    -100
    -100
    -100
    -100
    -100
    -1500000 -1500000 -1500000 -1500000 -1500000
    15000
    15000
    15000
    15000
    15000
    170
    170
    170
    170
    170
    2550000
    2550000
    2550000
    2550000
    2550000
    2
    3
    4
    5
    6
    7
    8
    -633333.33
    -337500
    1012500
    1012500
    1012500
    1012500
    1012500
    -608740.23 -318033.79 935393.49 917052.44 899071.02 881442.18
    864159
    1586904.73498127
    3632959.14411474

    Year 3

    3356292.6882

    Q2

    Year 3
    Q3

    Q4

    -37500
    -37500
    -37500
    15000
    15000
    15000
    -100
    -100
    -100
    -1500000 -1500000 -1500000
    15000
    15000
    15000
    170
    170
    170
    2550000
    2550000
    2550000
    9
    10
    11
    1012500
    1012500
    1012500
    847214.71 830602.65 814316.33
    3356292.6882316

    Q1

    Q2

    Year 4
    Q3

    Q4

    -37500
    -37500
    -37500
    -37500
    15000
    15000
    15000
    15000
    -100
    -100
    -100
    -100
    -1500000 -1500000 -1500000 -1500000
    15000
    15000
    15000
    15000
    170
    170
    170
    170
    2550000
    2550000
    2550000
    2550000
    12
    13
    14
    15
    1012500
    1012500
    1012500
    1012500
    798349.34 782695.43 767348.46 752302.41
    3100695.648429

    Development cost
    Estimated devp time
    Pilot testing
    Ramp up cost
    marketing and support cost
    sales and production volume
    unit production cost
    unit price
    interest rate

    1000000
    9 months
    200000
    400000
    150000 per yr
    50000 per yr
    100
    170
    8%

    Project Schdule

    Year 1
    Q1
    Q2
    -333333.33 -333333.33

    Development cost
    Pilot testing
    Ramp up cost
    marketing and support cost
    sales and production volume
    Unit production cost
    Total production costs
    sales and production volume
    Unit price
    Sales Revenue
    Period cash flow
    PV (Quarterly cash fows)
    PV(Annual cash flows)
    Project NPV

    2% p.qtr
    8% p.a
    6,759,101

    0
    1
    -333333.33 -333333.33
    -333333.33 -326797.39
    -1586904.73498127

    ANSWER: IF ANNUAL SALES DECREASES PROJECT NPV ALSO DECREASES FROM 85 LAKHS T

    Year 1
    Year 2
    Q3
    Q4
    Q1
    Q2
    Q3
    Q4
    Q1
    -333333.33
    -100000
    -100000
    -200000
    -200000
    -37500
    -37500
    -37500
    -37500
    -37500
    -37500
    12500
    12500
    12500
    12500
    12500
    -100
    -100
    -100
    -100
    -100
    -1250000 -1250000 -1250000 -1250000 -1250000
    12500
    12500
    12500
    12500
    12500
    170
    170
    170
    170
    170
    2125000
    2125000
    2125000
    2125000
    2125000
    2
    3
    4
    5
    6
    7
    8
    -633333.33
    -337500
    837500
    837500
    837500
    837500
    837500
    -608740.23 -318033.79 773720.54 758549.55 743676.03 729094.15 714798.19
    1586904.73498127
    3005040.27969985

    SES FROM 85 LAKHS TO 67 LAKHS

    Year 3

    2776192.71742

    Q2

    Year 3
    Q3

    -37500
    -37500
    12500
    12500
    -100
    -100
    -1250000 -1250000
    12500
    12500
    170
    170
    2125000
    2125000
    9
    10
    837500
    837500
    700782.54 687041.7
    2776192.71742614

    Q4

    Q1

    Q2

    Year 4
    Q3

    Q4

    -37500
    -37500
    -37500
    -37500
    -37500
    12500
    12500
    12500
    12500
    12500
    -100
    -100
    -100
    -100
    -100
    -1250000
    -1250000 -1250000 -1250000 -1250000
    12500
    12500
    12500
    12500
    12500
    170
    170
    170
    170
    170
    2125000
    2125000
    2125000
    2125000
    2125000
    11
    12
    13
    14
    15
    837500
    837500
    837500
    837500
    837500
    673570.3 660363.035 647414.74 634720.33 622274.84
    2564772.94376226

    Development cost
    Estimated devp time
    Pilot testing
    Ramp up cost
    marketing and support cost
    sales and production volume
    unit production cost
    unit price
    interest rate

    1000000
    9 months
    200000
    400000
    150000 per yr
    70000 per yr
    100
    170
    8%

    Project Schdule

    Year 1
    Q1
    Q2
    -333333.33 -333333.33

    Development cost
    Pilot testing
    Ramp up cost
    marketing and support cost
    sales and production volume
    Unit production cost
    Total production costs
    sales and production volume
    Unit price
    Sales Revenue
    Period cash flow
    PV (Quarterly cash fows)
    PV(Annual cash flows)
    Project NPV

    2% p.qtr
    8% p.a
    10,246,984

    0
    1
    -333333.33 -333333.33
    -333333.33 -326797.39
    -1586904.73498127

    ANSWER: IF ANNUAL SALES INCREASES PROJECT NPV ALSO INCREASES FROM 85 LAKHS TO
    BEST OPTION IS TO SELL 70,000 UNITS PER YEAR AS ITS NPV VALUE IS HIGHEST

    Year 1
    Year 2
    Q3
    Q4
    Q1
    Q2
    Q3
    Q4
    Q1
    -333333.33
    -100000
    -100000
    -200000
    -200000
    -37500
    -37500
    -37500
    -37500
    -37500
    -37500
    17500
    17500
    17500
    17500
    17500
    -100
    -100
    -100
    -100
    -100
    -1750000 -1750000 -1750000 -1750000 -1750000
    17500
    17500
    17500
    17500
    17500
    170
    170
    170
    170
    170
    2975000
    2975000
    2975000
    2975000
    2975000
    2
    3
    4
    5
    6
    7
    8
    -633333.33
    -337500
    1187500
    1187500
    1187500
    1187500
    1187500
    -608740.23 -318033.79 1097066.4 1075555.3
    1054466 1033790.2 1013519.8
    1586904.73498127
    4260878.00852964

    ES FROM 85 LAKHS TO 1.02 CRORES

    Year 3

    3936392.65903

    Q2

    Year 3
    Q3

    Q4

    Q1

    Q2

    Year 4
    Q3

    Q4

    -37500
    -37500
    -37500
    -37500
    -37500
    -37500
    -37500
    17500
    17500
    17500
    17500
    17500
    17500
    17500
    -100
    -100
    -100
    -100
    -100
    -100
    -100
    -1750000 -1750000 -1750000
    -1750000 -1750000 -1750000 -1750000
    17500
    17500
    17500
    17500
    17500
    17500
    17500
    170
    170
    170
    170
    170
    170
    170
    2975000
    2975000
    2975000
    2975000
    2975000
    2975000
    2975000
    9
    10
    11
    12
    13
    14
    15
    1187500
    1187500
    1187500
    1187500
    1187500
    1187500
    1187500
    993646.88 974163.61 955062.36 936335.646 917976.12 899976.59 882329.99
    3936392.65903707
    3636618.35309574

    Development cost
    Estimated devp time
    Pilot testing
    Ramp up cost
    marketing and support cost
    sales and production volume
    unit production cost
    unit price
    interest rate

    1000000
    9 months
    200000
    400000
    150000 per yr
    60000 per yr
    100
    170
    9%

    Project Schdule

    Year 1
    Q1
    Q2
    -333333.33 -333333.33

    Development cost
    Pilot testing
    Ramp up cost
    marketing and support cost
    sales and production volume
    Unit production cost
    Total production costs
    sales and production volume
    Unit price
    Sales Revenue
    Period cash flow
    PV (Quarterly cash fows)
    PV(Annual cash flows)
    Project NPV

    2.25% p.qtr
    9% p.a
    8,283,241

    0
    1
    -333333.33 -333333.33
    -333333.33 -325998.37
    -1580805.56633043

    Year 1
    Year 2
    Q3
    Q4
    Q1
    Q2
    Q3
    Q4
    Q1
    -333333.33
    -100000
    -100000
    -200000
    -200000
    -37500
    -37500
    -37500
    -37500
    -37500
    -37500
    15000
    15000
    15000
    15000
    15000
    -100
    -100
    -100
    -100
    -100
    -1500000 -1500000 -1500000 -1500000 -1500000
    15000
    15000
    15000
    15000
    15000
    170
    170
    170
    170
    170
    2550000
    2550000
    2550000
    2550000
    2550000
    2
    3
    4
    5
    6
    7
    8
    -633333.33
    -337500
    1012500
    1012500
    1012500
    1012500
    1012500
    -605767.14 -315706.72 926278.89 905896.22 885962.08 866466.58 847400.08
    1580805.56633043
    3584603.76189727

    Year 3

    3279350.89693

    Q2

    Year 3
    Q3

    Q4

    -37500
    -37500
    -37500
    15000
    15000
    15000
    -100
    -100
    -100
    -1500000 -1500000 -1500000
    15000
    15000
    15000
    170
    170
    170
    2550000
    2550000
    2550000
    9
    10
    11
    1012500
    1012500
    1012500
    828753.13 810516.51 792681.18
    3279350.89693653

    Q1

    Q2

    Year 4
    Q3

    -37500
    -37500
    -37500
    15000
    15000
    15000
    -100
    -100
    -100
    -1500000 -1500000 -1500000
    15000
    15000
    15000
    170
    170
    170
    2550000
    2550000
    2550000
    12
    13
    14
    1012500
    1012500
    1012500
    775238.32 758179.29 741495.63
    3000092.34480813

    Q4

    -37500
    15000
    -100
    -1500000
    15000
    170
    2550000
    15
    1012500
    725179.1

    Development cost
    Estimated devp time
    Pilot testing
    Ramp up cost
    marketing and support cost
    sales and production volume
    unit production cost
    unit price
    interest rate

    1000000
    9 months
    200000
    400000
    150000 per yr
    60000 per yr
    100
    170
    10%

    Project Schdule

    Year 1
    Q1
    Q2
    -333333.33 -333333.33

    Development cost
    Pilot testing
    Ramp up cost
    marketing and support cost
    sales and production volume
    Unit production cost
    Total production costs
    sales and production volume
    Unit price
    Sales Revenue
    Period cash flow
    PV (Quarterly cash fows)
    PV(Annual cash flows)
    Project NPV

    2.50% p.qtr
    10% p.a
    8,069,666

    0
    1
    -333333.33 -333333.33
    -333333.33 -325203.25
    -1574754.67080667

    Year 1
    Year 2
    Q3
    Q4
    Q1
    Q2
    Q3
    Q4
    Q1
    -333333.33
    -100000
    -100000
    -200000
    -200000
    -37500
    -37500
    -37500
    -37500
    -37500
    -37500
    15000
    15000
    15000
    15000
    15000
    -100
    -100
    -100
    -100
    -100
    -1500000 -1500000 -1500000 -1500000 -1500000
    15000
    15000
    15000
    15000
    15000
    170
    170
    170
    170
    170
    2550000
    2550000
    2550000
    2550000
    2550000
    2
    3
    4
    5
    6
    7
    8
    -633333.33
    -337500
    1012500
    1012500
    1012500
    1012500
    1012500
    -602815.78 -313402.3 917275.03 894902.47 873075.58 851781.05 831005.9
    1574754.67080667
    3537034.12137136

    Year 3

    3204378.34293

    Q2

    Year 3
    Q3

    Q4

    Q1

    Q2

    Year 4
    Q3

    Q4

    -37500
    -37500
    -37500
    -37500
    -37500
    -37500
    -37500
    15000
    15000
    15000
    15000
    15000
    15000
    15000
    -100
    -100
    -100
    -100
    -100
    -100
    -100
    -1500000 -1500000 -1500000
    -1500000 -1500000 -1500000 -1500000
    15000
    15000
    15000
    15000
    15000
    15000
    15000
    170
    170
    170
    170
    170
    170
    170
    2550000
    2550000
    2550000
    2550000
    2550000
    2550000
    2550000
    9
    10
    11
    12
    13
    14
    15
    1012500
    1012500
    1012500
    1012500
    1012500
    1012500
    1012500
    810737.47 790963.38 771671.59 752850.334 734488.13 716573.79 699096.38
    3204378.34293512
    2903008.62596444

    Development cost
    Estimated devp time
    Pilot testing
    Ramp up cost
    marketing and support cost
    sales and production volume
    unit production cost
    unit price
    interest rate

    1000000
    9 months
    200000
    400000
    150000 per yr
    60000 per yr
    100
    170
    11%

    Project Schdule

    Year 1
    Q1
    Q2
    -333333.33 -333333.33

    Development cost
    Pilot testing
    Ramp up cost
    marketing and support cost
    sales and production volume
    Unit production cost
    Total production costs
    sales and production volume
    Unit price
    Sales Revenue
    Period cash flow
    PV (Quarterly cash fows)
    PV(Annual cash flows)
    Project NPV

    2.75% p.qtr
    11% p.a
    7,862,116

    0
    1
    -333333.33 -333333.33
    -333333.33
    -324412
    -1568751.53390568

    ANSWER: As Discount rate increases from 8% to 11%, Project NPV decreases from 85 lakhs to 78 lakhs
    Lower discount rate gives a higher NPV for the project

    Year 1
    Year 2
    Q3
    Q4
    Q1
    Q2
    Q3
    Q4
    Q1
    -333333.33
    -100000
    -100000
    -200000
    -200000
    -37500
    -37500
    -37500
    -37500
    -37500
    -37500
    15000
    15000
    15000
    15000
    15000
    -100
    -100
    -100
    -100
    -100
    -1500000 -1500000 -1500000 -1500000 -1500000
    15000
    15000
    15000
    15000
    15000
    170
    170
    170
    170
    170
    2550000
    2550000
    2550000
    2550000
    2550000
    2
    3
    4
    5
    6
    7
    8
    -633333.33
    -337500
    1012500
    1012500
    1012500
    1012500
    1012500
    -599885.94 -311120.25 908380.31 884068.42 860407.23 837379.29 814967.68
    1568751.53390568
    3490235.24855515

    from 85 lakhs to 78 lakhs

    Year 3

    3131319.46755

    Q2

    Year 3
    Q3

    Q4

    Q1

    Q2

    Year 4
    Q3

    Q4

    -37500
    -37500
    -37500
    -37500
    -37500
    -37500
    -37500
    15000
    15000
    15000
    15000
    15000
    15000
    15000
    -100
    -100
    -100
    -100
    -100
    -100
    -100
    -1500000 -1500000 -1500000
    -1500000 -1500000 -1500000 -1500000
    15000
    15000
    15000
    15000
    15000
    15000
    15000
    170
    170
    170
    170
    170
    170
    170
    2550000
    2550000
    2550000
    2550000
    2550000
    2550000
    2550000
    9
    10
    11
    12
    13
    14
    15
    1012500
    1012500
    1012500
    1012500
    1012500
    1012500
    1012500
    793155.9 771927.88 751268.01 731161.079 711592.29 692547.24 674011.91
    3131319.46755609
    2809312.52755952

    Development cost
    Debug
    Pilot testing
    Ramp up cost
    Advance marketing
    marketing and support cost
    Unit production cost Y1
    Unit production cost Y2
    Unit price Y1
    Unit price Y2
    Sales and prodn volume Y1
    Sales and prodn volume Y2
    Interest rate

    20000000
    3000000
    5000000
    3000000
    5000000
    1000000 per yr
    655
    545
    820
    650
    250000
    150000
    10%

    Project Schdule

    Year 1
    H1

    Development cost
    Debug
    Pilot testing
    Ramp up cost
    Advance marketing
    marketing and support cost
    Production and sales volume
    Unit production cost
    Total production costs
    Unit price
    Total Sales Revenue
    Period Cash Flow
    PV(Half yearly CF)
    PV(Annual Cash Flows)
    Project NPV

    -5000000

    5% half yrly
    10% p.a
    10,459,556
    $ 10.45 M

    0
    -5000000
    -5000000
    -9761904.76190476

    Year 1
    H2

    Year 2
    H1
    H2
    H1
    -5000000 -5000000 -5000000
    -1500000 -1500000
    -2500000 -2500000
    -3000000
    -5000000

    1
    -5000000
    -4761904.7619
    -9761904.76190476

    Year 3
    H2

    Year 4
    H1

    -500000
    -500000
    -500000
    125000
    125000
    75000
    -655
    -655
    -545
    -81875000 -81875000
    -40875000
    820
    820
    650
    102500000 102500000
    48750000
    2
    3
    4
    5
    6
    -9000000 -17000000
    20125000
    20125000
    7375000
    -8163265 -14685239 16556887.31 15768464.1 5503338.550195
    -22848504.4811575
    32325351.4053644
    10744613.3599048

    Year 4
    H2

    -500000
    75000
    -545
    -40875000
    650
    48750000
    7
    7375000
    5241274.81
    744613.3599048

    Development cost
    Debug
    Pilot testing
    Ramp up cost
    Advance marketing
    marketing and support cost
    Unit production cost Y1
    Unit production cost Y2
    Unit price Y1
    Unit price Y2
    Sales and prodn volume Y1
    Sales and prodn volume Y2
    Interest rate

    30000000
    3000000
    5000000
    3000000
    5000000
    1000000 per yr
    655
    545
    870
    700
    250000
    150000
    10%

    Project Schdule

    Year 1
    H1

    Development cost
    Debug
    Pilot testing
    Ramp up cost
    Advance marketing
    marketing and support cost
    Production and sales volume
    Unit production cost
    Total production costs
    Unit price
    Total Sales Revenue
    Period Cash Flow
    PV(Half yearly CF)
    PV(Annual Cash Flows)
    Project NPV

    -7500000

    5% half yrly
    10% p.a
    16,653,727

    0
    -7500000
    -7500000
    -14642857.1428571

    ANSWER: YES, THE ADDITIONAL INVESTMENT OF 1 MILLION DOLLARS GIVES A HIGHER npv VALUE OF

    Year 1
    H2

    Year 2
    H1
    H2
    H1
    -7500000 -7500000 -7500000
    -1500000 -1500000
    -2500000 -2500000
    -3000000
    -5000000

    Year 3
    H2

    Year 4
    H1

    -500000
    -500000
    -500000
    125000
    125000
    75000
    -655
    -655
    -545
    -81875000 -81875000
    -40875000
    870
    870
    700
    108750000 108750000
    52500000
    1
    2
    3
    4
    5
    6
    -7500000 -11500000 -19500000
    26375000
    26375000
    11125000
    -7142857.14286 -10430839 -16844833 21698777.77 20665502.64 8301646.287582
    -14642857.1428571
    -27275672.1736314
    42364280.4132415
    16207976.0852801

    ARS GIVES A HIGHER npv VALUE OF $16.6 M

    Year 4
    H2

    -500000
    75000
    -545
    -40875000
    700
    52500000
    7
    11125000
    7906329.798
    207976.0852801

    Development cost
    Debug
    Pilot testing
    Ramp up cost
    Advance marketing
    marketing and support cost
    Unit production cost Y1
    Unit production cost Y2
    Unit price Y1
    Unit price Y2
    Sales and prodn volume Y1
    Sales and prodn volume Y2
    Interest rate

    20000000
    3000000
    5000000
    3000000
    5000000
    1000000 per yr
    655
    545
    820
    650
    200000
    100000
    10%

    Project Schdule

    Year 1
    H1

    Development cost
    Debug
    Pilot testing
    Ramp up cost
    Advance marketing
    marketing and support cost
    Production and sales volume
    Unit production cost
    Total production costs
    Unit price
    Total Sales Revenue
    Period Cash Flow
    PV(Half yearly CF)
    PV(Annual Cash Flows)
    Project NPV

    -5000000

    5% half yrly
    10% p.a
    9,508

    0
    -5000000
    -5000000
    -9761904.76190476

    ANSWER: NO, WHEN SALES VOLUME IS REDUCED BY 50,000 UNITS PER YEAR, THE NPV DRASTICALLY D

    Year 1
    H2

    Year 2
    H1
    H2
    H1
    -5000000 -5000000 -5000000
    -1500000 -1500000
    -2500000 -2500000
    -3000000
    -5000000

    1
    -5000000
    -4761904.7619
    -9761904.76190476

    Year 3
    H2

    Year 4
    H1

    -500000
    -500000
    -500000
    100000
    100000
    50000
    -655
    -655
    -545
    -65500000 -65500000
    -27250000
    820
    820
    650
    82000000
    82000000
    32500000
    2
    3
    4
    5
    6
    -9000000 -17000000
    16000000
    16000000
    4750000
    -8163265 -14685239 13163239.6 12536418.66 3544523.134024
    -22848504.4811575
    25699658.2601655
    6920259.45214206

    S PER YEAR, THE NPV DRASTICALLY DROPPED TO $ 9,508. THIS PROJECT IS NOT VIABLE

    Year 4
    H2

    -500000
    50000
    -545
    -27250000
    650
    32500000
    7
    4750000
    3375736.318
    20259.45214206

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