Initial Outlay

Additional Outlay
Fixed Cost
Variable Cost Rate (% of sales)
Net working capital rate (% of sales)
Tax Rate
Required Return
Cash Flow growth rate after 5 years
Opportunity Cost
20 Year MACRS Depreciation

Initial Outlays
Opportunity Cost
Sales
Operating costs
Fixed cost
Variable cost
Depreciation
Depreciation Initial Outlay
Depreciation Second Outlay
Taxable Income
Taxes
Net Income
Depreciation
Operating Cash Flows
Capital Expenditures
Change in Net Working Captital
Net Working Capital
Project Cash Flow
Horizon Value
Free Cash Flow

NPV
IRR
PI

Consider the effect on NPV by

changing the growth rate and
required return rate

$50,000,000
$25,000,000
$2,000,000
60.00%
8.00%
40.00%
11.00%
4.00%
$0
0.0375

Year 2

0.06677

Time 0
Year 1
(50,000,000) $ (25,000,000)
$0
(1,000,000)

15,000,000
(11,000,000)

27,000,000
(18,200,000)

(1,000,000)

(2,000,000)

(2,000,000)

Year 3

(9,000,000)

(16,200,000)

(1,875,000)

(4,547,000)

(5,143,250)

(1,875,000)

(3,609,500)

(3,338,500)

(937,500)

(1,804,750)

(547,000)
218,800
(328,200)
4,547,000
4,218,800
$0
(960,000)

3,656,750
(1,462,700)
2,194,050
5,143,250
7,337,300
$0
(640,000)

0.07219

(2,875,000)
1,150,000
(1,725,000)
1,875,000
150,000
(50,000,000) $ (25,000,000)
(1,200,000)
-

1,200,000

2,160,000

2,800,000

(50,000,000)

(26,050,000)

3,258,800

6,697,300

(50,000,000)

(26,050,000)

3,258,800

6,697,300

$33,913,704
20.88%
1.68

$33,913,704
5%
6%

1.0%
146,773,534
99,265,186

1.5%
176,156,647
116,867,796

2.0%
215,334,131
138,871,058

7%
8%
9%
10%
11%
12%
13%
14%
15%
16%
17%
18%
19%
20%

required
return

Probability Adjusted NPV

Term

67,760,129
45,394,511
28,736,632
15,880,181
5,681,530
(2,586,946)
(9,410,213)
(15,123,913)
(19,967,701)
(24,117,245)
(27,704,224)
(30,829,274)
(33,570,608)
(35,989,926)

79,319,494
53,472,005
34,640,353
20,344,455
9,148,639
164,297
(7,187,977)
(13,302,073)
(18,455,081)
(22,847,572)
(26,628,285)
(29,909,836)
(32,779,047)
(35,303,912)

93,190,733
62,895,747
41,387,462
25,366,763
13,000,983
3,190,664
(4,763,719)
(11,328,412)
(16,826,105)
(21,487,208)
(25,480,616)
(28,932,934)
(31,940,923)
(34,579,787)

Growth Rate
Rate of Return Probability
99
4.00%
11.00%
75.00%
15
4.00%
14.00%
25.00%
Probability
Adjusted
NPV

Model assumptions

No salvage value assumed, the discount rate should

Growth rate of cashflow remains constant after year 5
Project will last atleast for 5 years

Time 0
-50000000.00

Year 1
-26050000.00

Age of the project (in whole years, greater than 5)

20

Project Cash Flow

Year 2
3258800.00

Year 3
6697300.00

Calculate NPV

Discount rate
Growth rate
NPV
Sensitivity Analysis

To
10

40

Age
Growth Rate

Calculate NPV

Clear

NPV vs. Growth Rate

From

Age range (Max 100 years)

19.00%
7.00%
-27304634.83

Sensitivity

0.06177

Year 4

0.05713

Year 5

35,000,000
(23,000,000)

40,000,000
(26,000,000)

(2,000,000)

(2,000,000)

(21,000,000)

(24,000,000)

(4,757,750)

(4,400,750)

(3,088,500)

(2,856,500)

(1,669,250)

(1,544,250)

7,242,250
(2,896,900)
4,345,350
4,757,750
9,103,100
$0
(400,000)

9,599,250
(3,839,700)
5,759,550
4,400,750
10,160,300
$0
(160,000)

3,200,000

3,360,000

8,703,100

10,000,300
148,575,886
158,576,186

8,703,100

growth rate
2.5%
3.0%
270,182,608
352,455,323
167,160,966
204,880,843

0.05285

Year 6

42,000,000

3.5%
489,576,516
257,688,672

4.0%
763,818,901
336,900,414

4.5%
1,586,546,057
468,919,985

110,144,468
74,032,897
49,172,588
31,058,713
17,306,543
6,535,597
(2,108,580)
(9,183,130)
(15,066,812)
(20,026,077)
(24,253,797)
(27,893,006)
(31,052,003)
(33,814,283)

131,336,638
87,397,477
58,255,235
37,563,798
22,150,298
10,252,188
812,073
(6,842,821)
(13,160,911)
(18,452,551)
(22,939,349)
(26,783,749)
(30,107,527)
(33,003,749)

158,583,713
103,731,964
68,989,272
45,069,665
27,639,888
14,406,026
4,040,163
(4,279,626)
(11,089,279)
(16,753,143)
(21,527,534)
(25,597,992)
(29,102,116)
(32,144,092)

194,913,146
124,150,072
81,870,117
53,826,511
33,913,704
19,079,093
7,626,930
(1,460,112)
(8,829,317)
(14,912,117)
(20,007,118)
(24,327,538)
(28,029,678)
(31,230,707)

245,774,352
150,401,926
97,613,372
64,175,510
41,152,723
24,375,236
11,635,669
1,656,194
(6,354,120)
(12,911,002)
(18,365,068)
(22,962,977)
(26,883,279)
(30,258,393)

Year 5
10000300.00

Year 6
10700321.00

Year 7
11449343.47

Year 8
12250797.51

NPV
33,913,704
(1,460,112)

25,070,250

Year 4
8703100.00
-27304634.83

54131196.21
55692302.07
57295239.37
58940944.52
60630368.7
62364477.97

5.0%
#DIV/0!
732,959,127

5.5%
(1,704,362,566)
1,525,076,553

6.0%
(881,635,411)
#DIV/0!

6.5%
(607,393,025)
(1,643,393,151)

7.0%
(470,271,833)
(851,275,725)

7.5%
(387,999,117)
(587,236,583)

322,066,162
185,404,398
117,292,440
76,594,309
49,598,246
30,427,971
16,145,501
5,118,755
(3,631,404)
(10,727,968)
(16,586,182)
(21,493,448)
(25,654,994)
(29,221,258)

449,219,179
234,407,858
142,594,099
91,772,841
59,579,317
37,411,895
21,256,644
8,988,677
(622,086)
(8,337,026)
(14,652,609)
(19,906,358)
(24,335,724)
(28,112,597)

703,525,212
307,913,048
176,329,645
110,746,006
71,556,604
45,559,807
27,097,950
13,342,339
2,721,600
(5,706,989)
(12,543,257)
(18,187,010)
(22,914,973)
(26,924,746)

1,466,443,311
430,421,699
223,559,410
135,140,076
86,195,509
55,189,158
33,837,918
18,276,489
6,458,662
(2,800,107)
(10,233,014)
(16,318,154)
(21,380,562)
(25,648,906)

#DIV/0!
675,439,000
294,404,056
167,665,502
104,494,140
66,744,379
41,701,215
23,915,518
10,662,856
429,763
(7,691,747)
(14,279,402)
(19,718,283)
(24,274,924)

(1,585,229,085)
1,410,490,904
412,478,467
213,201,098
128,020,952
80,867,427
50,994,201
30,422,090
15,427,609
4,039,617
(4,882,979)
(12,046,482)
(17,911,458)
(22,791,024)

Year 9
13108353.34

Year 10
14025938.07

Year 11
15007753.74

Year 12
16058296.50

Year 13
17182377.25

Year 14
18385143.66

NPV at return rate=14%

40,000,000

NPV at return rate=14%

40,000,000
30,000,000

Break Even=4.24%

NPV

20,000,000
10,000,000
0.0%
(10,000,000)

1.0%

(20,000,000)

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Cash Flow Growth Rate (after year 5)

NPV at growth rate=4%

10,000,000
8,000,000
6,000,000
4,000,000

NPV

2,000,000
(2,000,000)

10%

11%

12%

13%

14%

15%

16%

17%

(4,000,000)
(6,000,000)
(8,000,000)
(10,000,000)

Required Return Rate

Year 15
Year 16
Year 17
Year 18
Year 19
Year 20
######## ######## ######## ######## ######## ########

Year 21
Year 22
Year 23
0.00
0.00
0.00

Year 24
Year 25
Year 26
Year 27
Year 28
Year 29
Year 30
Year 31
Year 32
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00

Year 33
Year 34
Year 35
Year 36
Year 37
Year 38
Year 39
Year 40
Year 41
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00

Year 42
Year 43
Year 44
Year 45
Year 46
Year 47
Year 48
Year 49
Year 50
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00

Year 51
Year 52
Year 53
Year 54
Year 55
Year 56
Year 57
Year 58
Year 59
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00

Year 60
Year 61
Year 62
Year 63
Year 64
Year 65
Year 66
Year 67
Year 68
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00

Year 69
Year 70
Year 71
Year 72
Year 73
Year 74
Year 75
Year 76
Year 77
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00

Year 78
Year 79
Year 80
Year 81
Year 82
Year 83
Year 84
Year 85
Year 86
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00

Year 87
Year 88
Year 89
Year 90
Year 91
Year 92
Year 93
Year 94
Year 95
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00

Year 96
Year 97
Year 98
Year 99 Year 100
0.00
0.00
0.00
0.00
0.00

Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

20 Years
0.0375
0.07219
0.06677
0.06177
0.05713
0.05285
0.04888
0.04522
0.04462
0.04461
0.04462
0.04461
0.04462
0.04461
0.04462
0.04461
0.04462
0.04461
0.04462
0.02231