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Net Present Value Assignment | Pizza Franchise

   

Added on  2019-09-25

4 Pages1157 Words173 Views
Sensitivity: Internal & RestrictedAnswer 1S.No. Variable ComponentCost per unit1Ingredients $ 4.912Royalty $ 0.703Marketing Expenses $ 0.60Total cost per unit $ 6.21Contribution per unit $ 3.79S.No. Fixed ComponentCost1Salary $ 247,509.602Rent $ 66,000.003Profit $ 80,000.00Total amount to be recovered $ 393,509.60Units to be sold in a year 103,957 Units to be sold in a week 1,999.18 Answer 2S.No. ParticularsPer unit amountCost1Sales $ 10.00 $ 1,196,000 2Variable Cost $ 6.21 $ 743,2793Contribution $ 3.79 $ 452,7214Fixed Cost excluding Interest and Dep $ 313,5105EBITDA $ 139,2126Interest $ 9,7507Depreciation $ 44,0008EBT $ 85,4629Tax $ 25,63910PAT $ 59,823S.No. ComponentBasisCost1Interest bearing Debt$150000 $ 150,0002Interest6.50% $ 9,750.0Annual Interest $ 9,750.00S.No. ComponentBasisCost1Capital Average of $350000 and $450000 $ 400,000

Sensitivity: Internal & RestrictedExpense2Depreciation11% $ 44,000Annual Depreciation $ 44,000.00Answer 3S.No.ParticularsAmount1Net Income (PAT) $ 59,8232Add- Depreciation $ 44,0003Less- Increase in net working capital $ - 4Add- Interest Expense $ 9,7505Less- Capital Expenditures $ -400,0006Free Cash Flows $ -286,427Answer 4S.No. ParticularsPer unit amountYear 1Year 2Year 3Year 41Sales $ 10.00 $ 1,196,000 $ 1,231,880 $ 1,268,836 $ 1,231,8802Variable Cost $ 6.21 $ 743,279 $ 765,577 $ 788,544 $ 765,5773Contribution $ 3.79 $ 452,721 $ 466,303 $ 480,292 $ 466,3034Fixed Cost excluding Interestand Dep $ 313,510 $ 313,510 $ 313,510 $ 313,5105EBITDA $ 139,212 $ 152,793 $ 166,783 $ 152,7936Interest $ 9,750 $ 9,750 $ 9,750 $ 9,7507Depreciation $ 44,000 $ 44,000 $ 44,000 $ 44,0008EBT $ 85,462 $ 99,043 $ 113,033 $ 99,0439Tax $ 25,639 $ 29,713 $ 33,910 $ 29,71310PAT $ 59,823 $ 69,330 $ 79,123 $ 69,330EBITDA in % of Capital Invested35%38%42%38%S.No.ParticularsYear 1Year 2Year 3Year 41Net Income (PAT) $ 59,823 $ 69,330 $ 79,123 $ 69,330 2Add- Depreciation $ 44,000 $ 44,000 $ 44,000 $ 44,000 3Less- Increase in net working capital $ - $ - $ - $ - 4Add- Interest Expense $ 9,750 $ 9,750 $ 9,750 $ 9,750 5Less- Capital Expenditures $ -400,0006Free Cash Flows $ -286,427 $ 123,080 $ 132,873 $ 123,080

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