Hola Cola case

(in millions os dollars) Year 0 Year 1 Year 2 Year 3

Revenues 0 36 36 36
COGS 0 -13.32 -13.32 -13.32
Gross profit 0 22.68 22.68 22.68
Depreciation 0 -10 -10 -10
SG&A expense 0 -0.3 -0.3 -0.3
Labor & energy 0 -2.76 -2.76 -2.76
Fixed costs 0 -3.06 -3.06 -3.06
OC 0 -0.06 -0.06 -0.06
EBIT 0 9.56 9.56 9.56
1-T 0 0.7 0.7 0.7
NOPAT 0 6.692 6.692 6.692
Depreciation 0 -10 -10 -10
OCF 0 16.692 16.692 16.692
Receivables 4.5 4.5 4.5 4.5
Payables -1.332 -1.332 -1.332 -1.332
Inventory 1.08 1.08 1.08 1.08
Working Capital 4.248 4.248 4.248 4.248
Change in working capital -4.248 0 0 0
Capex -50 0 0 0
Cannibalization 0 -0.8 -0.8 -0.8
FCF -54.248 15.892 15.892 15.892

NPV ($1.7205313)
IRR 16.8555%
Payback period 3.4135 (3 yrs and 5 months approx.)

Sensitivity analysis

NPV NPV
Sales volume ($1.7205313) Price ($1.7205313)
0.4 2
0.41 2.2
0.42 2.4
0.43 2.6
0.44 2.8
0.45 3
0.46 3.2
0.47 3.4
0.48 3.6
0.49 3.8
0.5 4
 0.51 4.2
0.52 4.4
0.53 4.6
0.54 4.8
0.55 5
0.56 5.2
0.57 5.4
0.58 5.6
0.59 5.8
0.6 6
0.61 6.2
0.62 6.4
0.63 6.6
0.64 6.8
0.65 7
0.66 7.2
0.67 7.4
0.68 7.6
0.69 7.8
0.7 8
0.71
0.72 NPV is 0 when price is $ 5.1097
0.73
0.74
0.75
0.76
0.77
0.78
0.79
0.8

NPV is 0 when sales is $ 0.6132

Year 4 Year 5 Tax 30%
36 36
-13.32 -13.32 Receivables 4.5
22.68 22.68 Payables 1.11
-10 -10
-0.3 -0.3 wacc 18.2%
-2.76 -2.76
-3.06 -3.06
-0.06 -0.06
9.56 9.56
0.7 0.7
6.692 6.692
-10 -10
16.692 16.692
4.5 0
-1.332 0
1.08 0
4.248 0
0 4.248
0 2.8
-0.8 -0.8
15.892 22.94

NPV
Cannibalization ($1.7205313)
0.2
0.25
0.3
0.35
0.4
0.45
0.5
0.55
0.6
0.65
0.7
 0.75
0.8
0.85
0.9
0.95
1
1.05
1.1
1.15
1.2
1.25
1.3
1.35
1.4
1.45
1.5
1.55
1.6
1.65
1.7

NPV is 0 when cannibalization is $ 0.2473

Sales volume 0.6
Price 5
Cannibalization 0.8

Raw materials 12.96

OH costs 0.36
COGS 13.32