INDICA CASE ANALYSIS

(Assumptions- First Tab)

(NPV,IRR- Second Tab)
Assignment Group
Name Roll No.
Ambadipudi Usha Kiran EPGP-11-135
Balram Chakraborty EPGP- 11-148
Maidhily Govind EPGP-11-175
Vivek Kumar EPGP-11-128

Incremental Cashflow

Cost Of Machinery &

-1,000,000.00
Equipment Cash outflow
Initial Investment
-15,000.00
(Working Capital) Cash outflow

Erosion cost -50,000.00

Cash outflow
Consulting cost 1,50,000 sunk cost/Irrelevant

Depreciation for Equipment(Assuming 30% rate)

Years Depreciation Equipment

Opening Balance Depreciation

0 1,000,000.00
1 1,000,000.00 300,000.00
2 700,000.00 210,000.00
3 490,000.00 147,000.00
4 343,000.00 102,900.00
5 240,100.00 72,030.00
 The resale value of the building is 0, no oppurtunity loss!. The
Rent Saved 10,000 the premises is idle and there is no opportunity loss
 INDICA CASE ANALYSIS
(Assumptions- First Tab)
(NPV,IRR- Second Tab)

Due to the launch of this product,

consultants assume that there will be a
loss of 50,000 (10%) in current sales on
a cash flow basis.

Irrelevant cost/Strike this OFF

Assuming 30% rate) ASSUMPTIONS

30% Depreciation Rate of Machine

Closing Balance Tax rate to calculate capital loss/gain

700,000.00 Market Value of machinery

490,000.00 Capital Loss
343,000.00 Tax 35%
240,100.00 ATSV
168,070.00 Book Value
e of the building is 0, no oppurtunity loss!. The assumption is that
idle and there is no opportunity loss
MPTIONS

30%

35%

150,000.00
18,070.00
6,324.50
156,324.50
Project Cash Flows

TimePeriod in Years 0 1 2
Cost Of Equipment -1,000,000.00
Initial Investment(Working Capital) -15,000.00

ICF -1,015,000.00 0.00 0.00

OCF
Number of units 7,000.00 10,000.00
Selling Price per Unit 102.00 107.10
Revenue 714,000.00 1,071,000.00
Variable Cost : Cost Price per Unit 50.00 55.00
Less: Production Expenses 350,000.00 550,000.00
Erosion Cost 50,000.00 50,000.00

Less: Depreciation 300,000.00 210,000.00

EBIT 14,000.00 261,000.00

EBIT*(1-T)+Depreciation 309,100.00 379,650.00

OCF 309,100.00 379,650.00

ATSV(Equipment)

TCF 0.00 0.00

NCF -1,015,000.00 309,100.00 379,650.00

Discounting
Required rate of return 20%
Rate
NPV 152,326.76
IRR 26.285%
ROI 37%
 3 4 5

0.00 0.00 0.00

14,000.00 12,000.00 8,000.00

112.46 118.08 123.98
1,574,370.00 1,416,933.00 991,853.10
60.50 66.55 73.21
847,000.00 798,600.00 585,640.00
50,000.00 50,000.00 50,000.00

147,000.00 102,900.00 72,030.00

530,370.00 465,433.00 284,183.10

491,740.50 405,431.45 256,749.02

491,740.50 405,431.45 256,749.02

156,324.50

0.00 0.00 156,324.50

491,740.50 405,431.45 413,073.52
Remarks

Increase in 5% per year

Selling price/unit* Number of units
Increase in 10% per year
Cost/unit* Number of units
10,000*12 months*5years

Revenue-Production Expenses-Erosion cost-

Depreciation
35%