Cranfield Analysis Done by Anonymous

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MODEL-GENERATED DATA: CRANFIELD INC. (PART II)

Net Investment Outlay: Depreciation Schedule: Basis: $460,000

Equipment cost $400,000 MACRS Dep. End of Year

Freight 20,000 Year Factor Expense Book Value

Installation 40,000 ------ ------ -------- --------

Change in NWC 15,000 1 33% $151,800 $308,200

-------- 2 45% 207,000 101,200

$475,000 3 15% 69,000 32,200

======== 4 7% 32,200 0

------ --------

100% $460,000

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Cash Flows: Year Year Year Year Year

0 1 2 3 4

-------- -------- -------- -------- --------

Unit price $2.00 $2.10 $2.21 $2.32 $2.43

Unit sales 400,000 400,000 400,000 400,000

-------- -------- -------- --------

Revenues $840,000 $882,000 $926,100 $972,405

Fixed operating costs 100,000 100,000 100,000 100,000

Variable operating costs 510,000 520,200 530,604 541,216

Total operating costs 610,000 620,200 630,604 641,216

Depreciation 151,800 207,000 69,000 32,200

Net cannibalization effects 20,000 20,000 20,000 20,000

-------- -------- -------- --------

Before tax income $58,200 $34,800 $206,496 $278,989

Taxes 23,280 13,920 82,598 111,596

-------- -------- -------- --------

Net income $34,920 $20,880 $123,898 $167,393

Plus depreciation 151,800 207,000 69,000 32,200

-------- -------- -------- --------

Net operating cash flow $186,720 $227,880 $192,898 $199,593

-------- -------- --------

Salvage value $50,000

SV tax 20,000

Recovery of NWC 15,000

--------

Termination CF $45,000

-------- -------- -------- -------- --------

Project NCF ($475,000) $186,720 $227,880 $192,898 $244,593

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Decision Measures: Cumulative Cash Flows:

NPV $195,063.41 0 ($475,000)

IRR 1.0% 1 (288,280)

MIRR 19.9% 2 (60,400)

Payback 2.3 3...