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    Financial Management NPV

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    Ana
    1. The document presents financial projections for a base case, best case, and worst case of a new educational program over 5 years. It projects the number of students, tuition per student, variable costs per student, contribution per student, fixed costs, depreciation, earnings before and after taxes, operating cash flows, and NPV and IRR for each case. 2. The base case results in an NPV of $1,062,352 and an IRR of 23.44%. The best case has higher student enrollment and results in an NPV of $2,574,043 and IRR of 32.14%. The worst case has lower enrollment and an NPV of $0 and IRR

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    Financial Management NPV

    Uploaded by

    Ana
    13 views8 pages
    1. The document presents financial projections for a base case, best case, and worst case of a new educational program over 5 years. It projects the number of students, tuition per student, variable costs per student, contribution per student, fixed costs, depreciation, earnings before and after taxes, operating cash flows, and NPV and IRR for each case. 2. The base case results in an NPV of $1,062,352 and an IRR of 23.44%. The best case has higher student enrollment and results in an NPV of $2,574,043 and IRR of 32.14%. The worst case has lower enrollment and an NPV of $0 and IRR

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    NPV Calculation - Finance course

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    1. The document presents financial projections for a base case, best case, and worst case of a new educational program over 5 years. It projects the number of students, tuition per student, variable costs per student, contribution per student, fixed costs, depreciation, earnings before and after taxes, operating cash flows, and NPV and IRR for each case. 2. The base case results in an NPV of $1,062,352 and an IRR of 23.44%. The best case has higher student enrollment and results in an NPV of $2,574,043 and IRR of 32.14%. The worst case has lower enrollment and an NPV of $0 and IRR

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    13 views8 pages

    Financial Management NPV

    Uploaded by

    Ana
    1. The document presents financial projections for a base case, best case, and worst case of a new educational program over 5 years. It projects the number of students, tuition per student, variable costs per student, contribution per student, fixed costs, depreciation, earnings before and after taxes, operating cash flows, and NPV and IRR for each case. 2. The base case results in an NPV of $1,062,352 and an IRR of 23.44%. The best case has higher student enrollment and results in an NPV of $2,574,043 and IRR of 32.14%. The worst case has lower enrollment and an NPV of $0 and IRR

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 8

    1.

    Base-case NPV and IRR

    YEAR 1 2 3 4 5
    Number of students
    1,500.00 1,500.00 1,500.00 1,500.00 1,500.00
    Tuition fee per student
    5,500.00 5,500.00 5,500.00 5,500.00 5,500.00
    - - - - -
    Variable cost per student
    2,500.00 2,500.00 2,500.00 2,500.00 2,500.00
    Contribution per student
    3,000.00 3,000.00 3,000.00 3,000.00 3,000.00

    Contribution value 4,500,000.0 4,500,000.0


    4,500,000.00 4,500,000.00 4,500,000.00
    0 0
    - -
    - - -
    Fixed costs 1,500,000.0 1,500,000.0
    1,500,000.00 1,500,000.00 1,500,000.00
    0 0
    - -
    - - -
    Depreciation 1,400,000.0 1,400,000.0
    1,400,000.00 1,400,000.00 1,400,000.00
    0 0

    Earnings before tax 1,600,000.0 1,600,000.0


    1,600,000.00 1,600,000.00 1,600,000.00
    0 0
    - - - - -
    30% Taxation
    480,000.00 480,000.00 480,000.00 480,000.00 480,000.00

    Earnings after tax 1,120,000.0 1,120,000.0


    1,120,000.00 1,120,000.00 1,120,000.00
    0 0

    Depreciation 1,400,000.0 1,400,000.0


    1,400,000.00 1,400,000.00 1,400,000.00
    0 0

    Operating cash flows 2,520,000.0 2,520,000.0


    2,520,000.00 2,520,000.00 2,520,000.00
    0 0
    PV factor 17%
    0.8547 0.7305 0.6244 0.5337 0.4561

    PV of cash flows 1,840,894.1 1,344,798.1


    2,153,846.15 1,573,413.80 1,149,400.10
    5 2

    Total PV
    8,062,352.33
    Investments
    7,000,000.00
    NPV
    1,062,352.33

    Initial -
    Investment 7,000,000.00

    Year 1 2,520,000.00

    Year 2 2,520,000.00

    Year 3 2,520,000.00

    Year 4 2,520,000.00

    Year 5 2,520,000.00
    IRR 23.44%

    1. Best-case NPV and IRR

    YEAR 1 2 3 4 5
    Number of students
    1,725.00 1,725.00 1,725.00 1,725.00 1,725.00
    Tuition fee per student
    5,500.00 5,500.00 5,500.00 5,500.00 5,500.00
    - - - - -
    Variable cost per student
    2,500.00 2,500.00 2,500.00 2,500.00 2,500.00
    Contribution per student
    3,000.00 3,000.00 3,000.00 3,000.00 3,000.00

    Contribution value 5,175,000.0


    5,175,000.00 5,175,000.00 5,175,000.00 5,175,000.00
    0
    -
    - - - -
    Fixed costs 1,500,000.0
    1,500,000.00 1,500,000.00 1,500,000.00 1,500,000.00
    0
    -
    - - - -
    Depreciation 1,400,000.0
    1,400,000.00 1,400,000.00 1,400,000.00 1,400,000.00
    0

    Earnings before tax 2,275,000.0


    2,275,000.00 2,275,000.00 2,275,000.00 2,275,000.00
    0
    - - - - -
    30% Taxation
    682,500.00 682,500.00 682,500.00 682,500.00 682,500.00

    Earnings after tax 1,592,500.0


    1,592,500.00 1,592,500.00 1,592,500.00 1,592,500.00
    0
    Depreciation 1,400,000.0
    1,400,000.00 1,400,000.00 1,400,000.00 1,400,000.00
    0

    Operating cash flows 2,992,500.0


    2,992,500.00 2,992,500.00 2,992,500.00 2,992,500.00
    0
    PV factor 17%
    0.8547 0.7305 0.6244 0.5337 0.4561

    PV of cash flows 1,868,428.8


    2,557,692.31 2,186,061.80 1,596,947.77 1,364,912.62
    9

    Total PV
    9,574,043.39
    Investments
    7,000,000.00
    NPV
    2,574,043.39
    Initial -
    Investment 7,000,000.00

    Year 1 2,992,500.00

    Year 2 2,992,500.00

    Year 3 2,992,500.00

    Year 4 2,992,500.00

    Year 5 2,992,500.00
    IRR 32.14%

    Worst-case NPV and IRR

    YEAR 1 2 3 4 5
    Number of students
    1,275.00 1,275.00 1,275.00 1,275.00 1,275.00
    Tuition fee per student
    5,500.00 5,500.00 5,500.00 5,500.00 5,500.00
    Variable cost per - - - - -
    student 2,500.00 2,500.00 2,500.00 2,500.00 2,500.00
    Contribution per student
    3,000.00 3,000.00 3,000.00 3,000.00 3,000.00
    Contribution value
    3,825,000.0 3,825,000.0 3,825,000.0 3,825,000.0 3,825,000.0
    0 0 0 0 0
    - - - - -
    Fixed costs 1,500,000.0 1,500,000.0 1,500,000.0 1,500,000.0 1,500,000.0
    0 0 0 0 0
    - - - - -
    Depreciation 1,400,000.0 1,400,000.0 1,400,000.0 1,400,000.0 1,400,000.0
    0 0 0 0 0
    Earnings before tax
    925,000.00 925,000.00 925,000.00 925,000.00 925,000.00
    - - - - -
    30% Taxation
    277,500.00 277,500.00 277,500.00 277,500.00 277,500.00
    Earnings after tax
    647,500.00 647,500.00 647,500.00 647,500.00 647,500.00

    Depreciation 1,400,000.0 1,400,000.0 1,400,000.0 1,400,000.0 1,400,000.0


    0 0 0 0 0

    Operating cash flows 2,047,500.0 2,047,500.0 2,047,500.0 2,047,500.0 2,047,500.0


    0 0 0 0 0
    PV factor 17%
    0.8547 0.7305 0.6244 0.5337 0.4561

    PV of cash flows 1,750,000.0 1,495,726.5 1,278,398.7 1,092,648.4


    933,887.58
    0 0 1 7

    Total PV 6,550,661.2
    7

    Investments 7,000,000.0
    0
    -
    NPV
    449,338.73

    -
    Initial 7,000,000.0
    Investment 0

    2,047,500.0
    Year 1 0

    2,047,500.0
    Year 2 0
    Year 3
    2,047,500.0
    0

    2,047,500.0
    Year 4 0

    2,047,500.0
    Year 5 0
    IRR 14.17%

    2. Payback period Analysis

    In the first scenario, payback period = 7000000/2520000 = 2.78 Years

    In the best scenario, payback period = 7000000/2992500 = 2.34 Years

    In the worst scenario, payback period = 7000000/2047500 = 3.42 Years


    Appendix

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