LEACT NEGATIVE NPV is BEST ALL 10^6

Year
Product sold 1200 0
VARIABLE COSTS R/tonne 1
Raw material 300 2
Plant services 40 3
Packaging 60 4
400 5
CAPITAL COSTS 6
Initial investment 3.00E+08 7
Buildings 6.00E+07 3.60E+08 half in year 0 and 1
Working capital 5.00E+06 At end of year 2

DIRCET FIXED OP COSTS

Feedstocks 3.50E+05
Salaries 9.00E+05
Labour 1.50E+06
Overhead 4.50E+05
Fixed indirect cost 1.60E+06
4.80E+06

ANNUAL PRODUCTION PLANNING

YEAR 0 1 2 3 4 5 6
TONNE PRODUCT 8.00E+04 1.40E+05 1.80E+05 1.80E+05 1.80E+05
SALES 9.60E+07 1.68E+08 2.16E+08 2.16E+08 2.16E+08
VARIABLE COST 3.20E+07 5.60E+07 7.20E+07 7.20E+07 7.20E+07
FIXED COST 4.80E+06 4.80E+06 4.80E+06 4.80E+06 4.80E+06
PRODUCTION COST 3.68E+07 6.08E+07 7.68E+07 7.68E+07 7.68E+07

2 years of construction
5 year of production
Linear depreciation over 5 years 20% pa
Tax payable 30% of prev year's profit
Corporate capital cost of 8%
Scraped after year 7
No tax payable on scrap value
S_cap 25% initial cost 7.50E+07
S_build 5% initial cost 3.00E+06
 CAPITAL CASH FLOW
Plant Buildings Working Total Sales Production cost Cash flow
-150 -30 -180 -- -- --
-150 -30 -5 -185 -- -- --
96 -36.8 59.2
168 -60.8 107.2
216 -76.8 139.2
Deprciate 216 -76.8 139.2
20% pa 5 5 216 -76.8 139.2
75 3 get it back 78 -- -- 0

PREV Yrs
DECPRCIATION (NOT LAND) PROFIT AFTER TAX PROJECT
Year Plant Buildings Total DEP MINUS DEP TAX 30% CASHFLOW (CF) CF
0 -180
1 -- -185
2 -- 59.2 59.2
3 45 11.4 56.4 2.8 0.84 106.36 106.36
4 45 11.4 56.4 50.8 15.24 123.96 123.96
5 45 11.4 56.4 82.8 24.84 114.36 114.36
6 45 11.4 56.4 82.8 24.84 114.36 119.36
7 45 11.4 56.4 82.8 24.84 -24.84 53.16
(300-75)*0,20
(60-3)*0,2 thus PROFITABLE
 12.50%
CUM PROJ PROJ
CF DCF DCFROR 1.125057
-180 -180 -180.00
-365.00 -171.30 -164.44
-305.80 50.75 46.77
-199.44 84.43 74.69
-75.48 91.11 77.37
38.88 77.83 63.45
158.24 75.22 58.86
211.40 31.02 23.30
POSITIVE 59.07135006 0.00
thus PROFITABLE NPV need ZERO
DCF=(PROJ CF)/(1+i)^n (p251) ALSO FOR DCFROR
corporate cost of investment (i) 0.08