05 Jun Value of future flows Initial expenditure
cQuestion
Year
Cost of Capital
Today
(US$ in millions)
Revenue
Selling, General, Admin
Depreciation
Interest Expense
Taxes
Time 1 Time 2 Time 3 Time 4 Time 5 Time 6
6%
6%
6%
6%
6%
6%
$30.10 $34.20 $38.10 $40.40 $45.60 $50.00
($16.10) ($17.20) ($18.90) ($19.50) ($21.40) ($24.30)
($4.10) ($4.40) ($4.80) ($4.90) ($5.30) ($5.70)
($0.45) ($0.56) ($0.69) ($0.73) ($0.78) ($0.81)
($1.10) ($1.30) ($1.70) ($1.90) ($2.00) ($2.10)
Change in fixed assets
($1.30)
($2.40)
($0.90)
$0.00
($4.90)
($2.10)
0.890
0.840
0.792
0.747
0.705
Students need to calculate the following:
Net Income
Depreciation added back
Change in fixed assets
Free Cash Flow
$8.35
$4.10
($1.30)
$11.15
Pvif factor
PV Cash flows
0.943
$10.51
Value of future flows
Initial expenditure
NPV
($18.00)
The initial project was funded using an $18,000,000 bank loan carrying a 6% interest ra
Today
(US$ in millions)
Revenue
Selling, General, Admin
Depreciation
Interest Expense
Taxes
Time 1 Time 2 Time 3 Time 4 Time 5 Time 6
6%
6%
6%
6%
6%
6%
$30.10 $34.20 $38.10 $40.40 $45.60 $50.00
($16.10) ($17.20) ($18.90) ($19.50) ($21.40) ($24.30)
($4.10) ($4.40) ($4.80) ($4.90) ($5.30) ($5.70)
($0.45) ($0.56) ($0.69) ($0.73) ($0.78) ($0.81)
($1.10) ($1.30) ($1.70) ($1.90) ($2.00) ($2.10)
Change in fixed assets
($1.30)
($2.40)
($0.90)
$0.00
($4.90)
($2.10)
0.890
0.840
0.792
0.747
0.705
Students need to calculate the following:
Net Income
Depreciation added back
Change in fixed assets
Free Cash Flow
$8.35
$4.10
($1.30)
$11.15
Pvif factor
PV Cash flows
0.943
$10.51
Value of future flows
Initial expenditure
NPV
($18.00)
The initial project was funded using an $18,000,000 bank loan carrying a 6% interest ra
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