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    Material - Gestión Financiera - NPV Layout

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    jessica
    The document presents a case study on calculating the net present value (NPV) of an investment in a retail chain by a company called Quitongo. It provides cash flow projections over 4 years including revenue, costs, tax rates, capital expenditures, and working capital changes. It asks to calculate the NPV using a discount rate of 7%.

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    Material - Gestión Financiera - NPV Layout

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    jessica
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    The document presents a case study on calculating the net present value (NPV) of an investment in a retail chain by a company called Quitongo. It provides cash flow projections over 4 years including revenue, costs, tax rates, capital expenditures, and working capital changes. It asks to calculate the NPV using a discount rate of 7%.

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    Material_Gestión financiera - NPV layout

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    Material_Gestión financiera - NPV layout

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    The document presents a case study on calculating the net present value (NPV) of an investment in a retail chain by a company called Quitongo. It provides cash flow projections over 4 years including revenue, costs, tax rates, capital expenditures, and working capital changes. It asks to calculate the NPV using a discount rate of 7%.

    Copyright:

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

    Material - Gestión Financiera - NPV Layout

    Uploaded by

    jessica
    The document presents a case study on calculating the net present value (NPV) of an investment in a retail chain by a company called Quitongo. It provides cash flow projections over 4 years including revenue, costs, tax rates, capital expenditures, and working capital changes. It asks to calculate the NPV using a discount rate of 7%.

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    © All Rights Reserved
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    You are on page 1of 6

    Gestión financiera y contabilidad administrativa S2G2

    Week 6: Tax, working capital & inflation


    Bogotá, Colombia. 2021

    Net Present Value (NPV) layout

    A B C D E F G
    1 Time 0 1 2 3 4 5
    2 Sales X X X X
    3 Costs (X) (X) (X) (X)
    4 Operating cash flow X X X X
    5 Taxation (X) (X) (X) (X)
    6 Capital Expenditure (X)
    7 Scrap value X
    8 Tax benefit on TAD X X X X
    9 Working capital changes (X) (X) (X) (X) X _
    10 Net cash flows (X) X X X X X
    11 Discount factor X X X X X X
    12 Present value (X) X X X X X
    13 Net present value X _ _ _ _ _

    Case: NPV layout, tax and working capital


    Statement
    Quitongo is considering a major investment programme which will involve the creation of a chain retail of retail outlets throught the UK.

    The following schedule of expected cash flows has been prepared for analysis:

    Time 1 2 3 4
    Revenue $ 1,000 $ 1,750 $ 2,500 $ 3,200
    Direct costs $ 970 $ 1,350 $ 1,700 $ 1,800
    Office overheads $ 100 $ 100 $ 100 $ 100

    Additional information:

    (1) 40% of office overhead is an allocation of head office operating costs.

    (2) The cost of capital is 7% la tasa de descuento

    Quitongo Co is paying tax at 30% and is expected to do so for the foreseeable future. Tax is payable ne year after profits are earned.
    The cost of investment include $750,000 on fittings and equipment. Tax allowable depreciation is available on fittings and equipment (on
    a reducing balance basis

    Quitongo Co has an accounting year end of 31 December; expenditure on the investment programme will take place in January.

    As well, Quitonco Co expects the following working capital requirements during each year of the four years of the investment programm

    Year 1 Year 2 Year 3 Year 4


    $ 250 $ 300 $ 375 $ 400

    Quitongo Co's investment programme will also involve the following investment costs and disposal values

    Land and buildings $ 3,250

    The cost of lands and buildings includes $120 which has already been spent on surveyors' and other advisers' fees.

    Quitongo expects to sell the chain at the end of Year 4 for $4,500 after tax (this includes resale proceeds of $200 for fittings and equipm

    Solution

    A B C D E F G
    1 Time 0 1 2 3 4 5
    2 Sales
    3 Costs
    3 Overheads (60%)
    4 Operating cash flow
    5 Taxation @ 30%
    6 Capital Expenditure
    7 Sale of the business
    8 Land and buildings
    8 Tax benefit on TAD
    9 Working capital changes
    10 Net cash flows
    11 Discount factor
    12 Present value
    13 Net present value
    Note: values in thousands of dollars

    Helper calculus (Tax benefit on TAD)


    Time 1 2 3 4
    Book value 1
    Scrap
    TAD
    Book value 2
    Time
    Tax saved

    Source: BPP Learning Media Ltd. Financial management (FM) / BPP Learning Media Ltd. 2nd edition
    2021. [ISBN 9781 5097 3810 6]
    a S2G2

    Para su análisis se ha elaborado el siguiente calendario de flujos de caja previstos:


    ail of retail outlets throught the UK.

    e ne year after profits are earned.


    ailable on fittings and equipment (only) at 25% on

    me will take place in January.

    r years of the investment programme

    r advisers' fees.

    eeds of $200 for fittings and equipments).

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