Spartan Corporation - Lecture notes 1 PDF

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Summary

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Description

Spartan Corporation Capital Budgeting Project [Estimation of Cash Flow ] Particualrs

Initial Year

Year 1

Year 2

Year 3

Year 4

Deamd

60000

60000

100000

100000

Price

350

350

360

380

Sales Revenue

21000000

21000000

36000000

38000000

Variable cost/ unit

200

200

250

260

(-) Variable cost

12000000

12000000

25000000

26000000

(-) Annual Lease Exp

1000000

1000000

1000000

1000000

(-) Depreciation

2000000

2000000

2000000

2000000

(-) Annual Overhead Expense/ Int

1000000

1000000

1000000

1000000

Total Expense

16,000,000

16,000,000

29,000,000

30,000,000

Earning Before Interest & Tax [EBIT]

5,000,000

5,000,000

7,000,000

8,000,000

Earning Before Tax [EBT]

5,000,000

5,000,000

7,000,000

8,000,000

(-)Tax [20%]

1000000

1000000

1400000

1600000

EAT

4000000

4000000

5600000

6400000

(+) Depreciation

2000000

2000000

2000000

2000000

Net Cash In singapore Dollar

6000000

6000000

7600000

8400000

(-) Withholding tax [10%]

600000

600000

760000

840000

Singapore $ to be remitted

5400000

5400000

6840000

7560000

Interest

Salvage Value

12000000

Net S$ to be remitted

5400000

5400000

6840000

19560000

Exchange rate

$ 0.5000

$ 0.5000

$ 0.5000

$ 0.5000

Remitted Amount in $

2700000

2700000

3420000

9780000

Initial Investment in $

-10000000

Net Cash Flow in US $

-10000000

2700000

2700000

3420000

9780000

PV Factor

1

0.8695652

0.7561437

0.6575162

0.5717532

PV Amount in $

-10000000

2347826.1

2041587.9

2248705.5

5591746.7

NPV

2229866

Year

1

2

3

4

US Infaltion

6%

5%

5.50%

4.75%

Singapore Inflation

5%

5.50%

6.20%

5.75%

0.009524

-0.004739

-0.006591

-0.009456

$ 0.5048

$ 0.5024

$ 0.4991

$ 0.4943

Spot rate Forecasted Exchange Rates [PPP]

0

$0.50

Spartan Corporation

Capital Budgeting Project [Estimation of Cash Flow ] Particualrs

Initial Year

Year 1

Year 2

Year 3

Year 4

Deamd

60000

60000

100000

100000

Price

350

350

360

380

Sales Revenue

21000000

21000000

36000000

38000000

Variable cost/ unit

200

200

250

260

(-) Variable cost

12000000

12000000

25000000

26000000

(-) Annual Lease Exp

1000000

1000000

1000000

1000000

(-) Depreciation

2000000

2000000

2000000

2000000

(-) Annual Overhead Expense/ Int

1000000

1000000

1000000

1000000

Total Expense

16,000,000

16,000,000

29,000,000

30,000,000

Earning Before Interest & Tax [EBIT]

5,000,000

5,000,000

7,000,000

8,000,000

Earning Before Tax [EBT]

5,000,000

5,000,000

7,000,000

8,000,000

(-)Tax [20%]

1000000

1000000

1400000

1600000

EAT

4000000

4000000

5600000

6400000

(+) Depreciation

2000000

2000000

2000000

2000000

Net Cash In singapore Dollar

6000000

6000000

7600000

8400000

Interest

7,980,000 6,615,000 6,945,750 S$ accumulated by reinvesting funds to be remitted

29,940,750

(-) Withholding tax [10%]

2,994,075

Singapore $ to be remitted after withholding tax

26,946,675

Salvage Value

12000000

Net S$ to be remitted

0

0

0

Exchange rate

$ 0.5000

Remitted Amount in $ Initial Investment

-10000000

Net Cash Flow in US $

-10000000

0

0

0

19473338

0

0

0

19473338

PV Factor PV Amount in $ NPV

38946675

1,,133,944

Spartan Corporation Capital Budgeting Project

Particualrs Deamd Price Sales Revenue Variable cost/ unit (-) Variable cost (-) Annual Lease Exp (-) Annual Overhead Expense (-) Depreciation (-) other fixed OH EBIT (-) Interest Earning Before Tax [EBT] (-)Tax [20%] EAT (+) Depreciation Net Cash In singapore Dollar (-) Withholding tax [10%] Singapore $ to be remitted Salvage Value Net S$ to be remitted Exchange rate Remitted Amount in $ Initial Investment in $ Net Cash Flow in US $ PV Factor PV Amount in $ NPV PV Factor PV Amount in $ NPV

[Estimation of Cash Flow ] Initial Year Year 1 Year 2 Year 3 Year 4 60000 60000 100000 10000 350 350 360 380 21000000 21000000 36000000 3800000 200 200 250 26 12000000 12000000 25000000 2600000 0 0 0 0 1000000 1000000 1000000 100000 2000000 0 7000000 1000000 6000000 1200000 4800000 2000000 6800000

2000000 0 7000000 1000000 6000000 1200000 4800000 2000000 6800000

2000000 0 9000000 1000000 8000000 1600000 6400000 2000000 8400000

200000 0 1000000 100000 900000 180000 720000 200000 920000

680000 6120000

680000 6120000

840000 7560000

6120000

6120000

7560000

92000 828000 12000000 2028000

$ $ $ $ 0.5000 0.5000 0.5000 0.5000 3060000 3060000 3780000 1014000 -10000000 -10000000 1 -10000000 3257658.4 6

3060000 0.86956522 2660869.57

3060000 0.75614367 2313799.62

3780000 0.65751623 2485411.36

1014000 0.5717532 5797577.9

Spartan Corporation Capital Budgeting Project [Estimation of Cash Flow ] Particualrs

Initial Year

Year 1

Year 2

Year 3

Year 4

Deamd

60000

60000

100000

100000

Price

350

350

360

380

Sales Revenue

21000000

21000000

36000000

38000000

Variable cost/ unit

200

200

250

260

(-) Variable cost

12000000

12000000

25000000

26000000

(-) Annual Lease Exp

0

0

0

0

(-) Annual Overhead Expense/ Int

1000000

1000000

1000000

1000000

(-) Depreciation

2000000

2000000

2000000

2000000

(-) other fixed OH

0

0

0

0

Earning Before Tax [EBT]

6000000

6000000

8000000

9000000

(-)Tax [20%]

1200000

1200000

1600000

1800000

EAT

4800000

4800000

6400000

7200000

(+) Depreciation

2000000

2000000

2000000

2000000

Net Cash In singapore Dollar

6800000

6800000

8400000

9200000

(-) Withholding tax [10%]

680000

680000

840000

920000

Singapore $ to be remitted

6120000

6120000

7560000

8280000

Salvage Value

22000000

Net S$ to be remitted

6120000

6120000

7560000

30280000

Exchange rate

$ 0.5000

$ 0.5000

$ 0.5000

$ 0.5000

Remitted Amount in $

3060000

3060000

3780000

15140000

Initial Investment in $

-15000000

Net Cash Flow in US $

-15000000

3060000

3060000

3780000

15140000

PV Factor

1

0.869565

0.756144

0.657516

0.571753

PV Amount in $

-15000000

2660870

2313800

2485411

8656344

NPV

1116425...