最新mini-case-business-finance-答案
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Refer to Mini-Case on Page 360 (Conch Republic Electronics)
Questions:
1.What is the pay back period of the project?
2.What is the profitability index of the project?
3.What is the IRR of the project?
4.What is the NPV of the project?
5.How sensitive is the NPV to changes in the price of the new PDA?
6.How sensitive is the NPV to changes in the quantity sold?
7.Should Conch Republic produce the new PDA?
Answer:
Working process
- Year 0: CF= －15000000
- Year 1: CF=3740000－2520000=1220000
S=70000×250－(80000×240－(80000－15000)×220)
=12600000
VC=70000×86－15000×68
=5000000
OCF= (S－VC－F)×(1－T) +DT
= (12600000－5000000－3000000)×(1－35%) +15000000÷7×0.35
=3740000
NWC=－12600000×20%
=－2520000
- Year2: CF=5066000－580000=4486000
S=80000×250－(60000×240－(60000－15000)×220)
=15500000
VC=80000×86－15000×68
=5860000
OCF= (15500000－5860000－3000000)×(1－35%) +15000000÷7×0.35 =5066000
NWC=2520000－15500000×20%
=－580000
- Year 3: CF=9460000－1900000=7560000
S=100000×250=25000000
VC=100000×86=8600000
OCF= (25000000－8600000－3000000)×(1－35%) +15000000÷7×0.35 =9460000
NWC=15500000×20%－25000000×20%
=－1900000
- Year 4: CF=7861000+750000=8611000
S=85000×250=21250000
VC=85000×86=7310000
OCF= (21250000－7310000－3000000)×(1－35%)+15000000÷7×0.35 =7861000
NWC=25000000×20%－21250000×20%
=750000
- Year 5: CF=6795000+4250000+3450000=14495000
S=75000×250=18750000
VC=75000×86=6450000
OCF= (18750000－6450000－3000000)×(1－35%)+15000000÷7×0.35 =6795000
NWC=21250000×20%=4250000
A-t S=3000000－0.35×(3000000－15000000÷ 7×(7－5))
=3450000
1. year1: 15000000－1220000=13780000
year2: 13780000－4486000=9294000
year3: 9294000－7560000=1734000
year4: 1734000－8611000=－6877000
Payback Period of the Project=3+1734000÷8611000=3.20years
2. PI= (present value of the net cash flows)/ (initial cash outlay)
= (1220000÷ (1+12%) +4486000÷ (1+12%) 2 +7560000 ÷ (1+12%) 3 +8611000÷ (1+12%) 4
+ 14495000÷ (1+12%) 5)/15000000
=1.5829
Decision rule:
Accept if PI > 1
Reject if PI < 1
3. IRR —Internal Rate of Return
0)1(01=-+∑=C r CF n
t t t 1220000÷ (1+k) +4486000÷ (1+k) 2 +7560000 ÷ (1+k) 3 +8611000÷ (1+k) 4 + 14495000÷ (1+k) 5 －15000000=0
Use the trail and error method
k=12%, NPV=23743854.57－15000000=8743854.569
k=14%, NPV=22251443.49－15000000=7251443.492
k=20%, NPV=18484841.18－15000000=3484841.178
k=30%, NPV=13952830.78－15000000=－1047169.217
k=25%, NPV=15994547.2－15000000=994547.2
k=27%, NPV=15492474.77－15000000=492474.7671
k=29%, NPV=14440324.44－15000000=－669675.5627
k=28%, NPV=14722498.73－15000000=－277501.2739
k=27.5%, NPV=－75684.7173; k=27.3%, NPV==6140.9647; k=27.4%, NPV=－34851.1433 %
277671.4924740%28%279)277501.273(1492474.767--=---x x=27.64%
IRR=27.85%>12%
4. NPV=－15000000+1220000÷ (1+12%) +4486000÷ (1+12%) 2 +7560000 ÷ (1+12%) 3
+8611000÷ (1+12%) 4 + 14495000÷ (1+12%) 5