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More than Just Lines on a Map: Best Practices for U.S Bike Routes
Worldwide paper company Spreadsheet
1. Case spreadsheet
YEAR 2,007
A. FIXED ASSETS
Cash flow from the Investment in Fixed Assets -$16
Cash flow from the sale of fixed assets (net of capital gain tax of 40%)
B. WORKING CAPITAL & OTHER START-UP EXPENSES
Incremental sales
Change in Working capital
CF from investment in working capital & other
C. DEPRECIATION EXPENSE WORKSHEET
Depreciable basis of New Machine $18
Percent expense
Depreciation expense for New Machine
Remaiing book value of new machine
D. OPERATIONS
Shortwood sales revenue
COGS(75% of revenue)
SG&A expense(5% of revenue)
Net income from shortwood sales
Operating saving
Minus net change in depreciation expense (from worksheet C above)
Equals EBIT
Minus tax (at 40%)
Equals profit after tax
Add back net change in depreciation expense
Equals cash flow from operations
D. PROJECT VALUATION at an r = 15%
Total Project Cash Flow -$16
Net Present Value (with Excel) -$2.14
E. PROJECT VALUATION at an r = 9.67%
Net Present Value (with Excel) $0.72
F. IRR 10.88%
G. PROJECT VALUATION at an r =11 % (checking our IRR calculation) $0
a. Capital Resource Capital Source
Debt
4. Long-term debt 2500.00
$ 3,000.00 20.00% of total capital
$ 12,000.00 80.00% of total capital
= 500/3000*(5.38%+1%)+2500/3000*5.78% = 0.0588
Tax rate = 40% 0.03528
= rE = rF + (rM – rF)
rF=4.6% 10-year Goverment Bond
MRP=6% Historical average
b=1.1
rE=11.2%
= 9.67%