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    Equity Analysis of A Project: Capital Budgeting Worksheet

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    asaefw
    The document provides a capital budgeting worksheet to analyze a potential project with an initial investment of $50,000 over 10 years. It includes inputs for revenues, expenses, tax rates, salvage values, and discount rates to calculate measures like NPV, IRR, and ROI. The analysis shows the project has a positive NPV of $47,928, an IRR of 23.55%, and an ROI of 60.12%, indicating the project should be accepted.

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    Equity Analysis of A Project: Capital Budgeting Worksheet

    Uploaded by

    asaefw
    32 views6 pages
    The document provides a capital budgeting worksheet to analyze a potential project with an initial investment of $50,000 over 10 years. It includes inputs for revenues, expenses, tax rates, salvage values, and discount rates to calculate measures like NPV, IRR, and ROI. The analysis shows the project has a positive NPV of $47,928, an IRR of 23.55%, and an ROI of 60.12%, indicating the project should be accepted.

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    Capital Budgeting Analysis

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    The document provides a capital budgeting worksheet to analyze a potential project with an initial investment of $50,000 over 10 years. It includes inputs for revenues, expenses, tax rates, salvage values, and discount rates to calculate measures like NPV, IRR, and ROI. The analysis shows the project has a positive NPV of $47,928, an IRR of 23.55%, and an ROI of 60.12%, indicating the project should be accepted.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    32 views6 pages

    Equity Analysis of A Project: Capital Budgeting Worksheet

    Uploaded by

    asaefw
    The document provides a capital budgeting worksheet to analyze a potential project with an initial investment of $50,000 over 10 years. It includes inputs for revenues, expenses, tax rates, salvage values, and discount rates to calculate measures like NPV, IRR, and ROI. The analysis shows the project has a positive NPV of $47,928, an IRR of 23.55%, and an ROI of 60.12%, indicating the project should be accepted.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 6

    CAPITAL BUDGETING WORKSHEET 1

    Equity Analysis of a Project


    INPUT SHEET: USER ENTERS ALL BOLD NUMBERS
    INITIAL INVESTMENT CASHFLOW DETAILS DISCOUNT RATE
    Initial Investment= $50,000 Revenues in year 1= $40,000 Approach(1:Direct;2:CA

    Opportunity cost (if any)= $7,484 Var. Expenses as % of Re 50% 1. Discount rate =
    Lifetime of the investment 10 Fixed expenses in year 1= 0 2a. Beta

    Salvage Value at end of proje $10,000 Tax rate on net income= 40% b. Riskless rate=

    Deprec. method(1:St.line;2: 2 If you do not have the breakdown of fixed and variabl c. Market risk premium =
    Tax Credit (if any )= 10% expenses, input the entire expense as a % of revenues. d. Debt Ratio =
    Other invest.(non-depreciabl 0 e. Cost of Borrowing =

    Discount rate used=


    WORKING CAPITAL

    Initial Investment in Work. $10,000


    Working Capital as % of Rev 25%
    Salvageable fraction at end= 100%

    GROWTH RATES
    1 2 3 4 5 6 7

    Revenues Do not enter 10.00% 10.00% 10.00% 10.00% 0.00% 0.00%


    Fixed Expenses Do not enter 10.00% 10.00% 10.00% 10.00% 0.00% 0.00%
    CAPITAL BUDGETING WORKSHEET 2

    Default: The fixed expense growth rate is set equal to the growth rate in revenues by default.
    YEAR
    0 1 2 3 4 5 6 7
    INITIAL INVESTMENT
    Investment $50,000
    - Tax Credit $5,000
    Net Investment $45,000
    + Working Cap $10,000
    + Opp. Cost $7,484
    + Other invest. $0
    Initial Investme $62,484

    SALVAGE VALUE
    Equipment $0 $0 $0 $0 $0 $0 $0
    Working Capital $0 $0 $0 $0 $0 $0 $0

    OPERATING CASHFLOWS
    Lifetime Index 1 1 1 1 1 1 1
    Revenues $40,000 $44,000 $48,400 $53,240 $58,564 $58,564 $58,564
    -Var. Expenses $20,000 $22,000 $24,200 $26,620 $29,282 $29,282 $29,282
    - Fixed Expenses $0 $0 $0 $0 $0 $0 $0
    EBITDA $20,000 $22,000 $24,200 $26,620 $29,282 $29,282 $29,282
    - Depreciation $10,000 $8,000 $6,400 $5,120 $4,096 $3,277 $2,621
    EBIT $10,000 $14,000 $17,800 $21,500 $25,186 $26,005 $26,661
    -Tax $4,000 $5,600 $7,120 $8,600 $10,074 $10,402 $10,664
    EBIT(1-t) $6,000 $8,400 $10,680 $12,900 $15,112 $15,603 $15,996
    + Depreciation $10,000 $8,000 $6,400 $5,120 $4,096 $3,277 $2,621
    - ∂ Work. Cap $0 $1,000 $1,100 $1,210 $1,331 $0 $0
    NATCF ($62,484) $16,000 $15,400 $15,980 $16,810 $17,877 $18,880 $18,618
    Discount Factor 1 1.10685 1.22511692 1.35602067 1.50091147 1.66128386 1.83879205 2.03526698
    Discounted CF ($62,484) $14,455 $12,570 $11,784 $11,200 $10,761 $10,268 $9,148

    Investment Measures
    NPV = $47,928
    IRR = 23.55%
    ROC = 60.12%

    BOOK VALUE & DEPRECIATION


    Book Value (beginning) $50,000 $40,000 $32,000 $25,600 $20,480 $16,384 $13,107
    Depreciation $10,000 $8,000 $6,400 $5,120 $4,096 $3,277 $2,621
    CAPITAL BUDGETING WORKSHEET 3

    BV(ending) $50,000 $40,000 $32,000 $25,600 $20,480 $16,384 $13,107 $10,486


    CAPITAL BUDGETING WORKSHEET 4

    DISCOUNT RATE
    Approach(1:Direct;2:CA 2

    1. Discount rate = 10%


    0.9

    b. Riskless rate= 8.00%

    c. Market risk premium = 5.50%


    d. Debt Ratio = 30.00%
    e. Cost of Borrowing = 9.00%

    Discount rate used= 10.69%

    8 9 10

    0.00% 0.00% 0.00%


    0.00% 0.00% 0.00%
    CAPITAL BUDGETING WORKSHEET 5

    8 9 10

    $0 $0 $10,000
    $0 $0 $14,641

    1 1 1
    $58,564 $58,564 $58,564
    $29,282 $29,282 $29,282
    $0 $0 $0
    $29,282 $29,282 $29,282
    $486 $0 $0
    $28,796 $29,282 $29,282
    $11,518 $11,713 $11,713
    $17,278 $17,569 $17,569
    $486 $0 $0
    $0 $0 $0
    $17,764 $17,569 $17,569
    2.25273525 2.49344001 2.75986408
    $7,885 $7,046 $15,294

    $10,486 $10,000 $10,000


    $486 $0 $0
    CAPITAL BUDGETING WORKSHEET 6

    $10,000 $10,000 $10,000

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