Assignment Corporate Financial Management
Added on 2020-04-01
11 Pages1335 Words55 Views
Running head: CORPORATE FINANCIAL MANAGEMENTCorporate Financial ManagementName of the Student:Name of the university:Authors Note:
1CORPORATE FINANCIAL MANAGEMENTTable of ContentsAnswer to Question 1......................................................................................................................2Answer to Question 2......................................................................................................................3Answer to Question 3......................................................................................................................4Reference.........................................................................................................................................9
2CORPORATE FINANCIAL MANAGEMENTAnswer to Question 1Requirement 1: Net Present Value inclusive of Copntract manufacturing Year 123456Increase in revenue: Sales of new product 2,380,0002,880,0003,630,0003,702,600.003,776,652.003,852,185.04Contract manufacturing 460,000510,000585,000596,700.00608,634.00620,806.68(A) Increase in Revenue 2,840,000.003,390,000.004,215,000.004,299,300.004,385,286.004,472,991.72Increase in expenditures: Raw materials: New products 714,000.00864,000.001,089,000.001,110,780.001,132,995.601,155,655.51Contract Manufacturing 115,000.00127,500.00146,250.00149,175.00152,158.50155,201.67Lost Sales net of variable cost 588,750.00720,000.00907,500.00925,650.00944,163.00963,046.26Wages150,000.00153,000.00156,060.00159,181.20162,364.82165,612.12Factory overhead 511,200.00610,200.00758,700.00773,874.00789,351.48805,138.51Repaid and Maintenance 15,000.0030,000.0030,600.0031,212.0031,836.24Advertisement 375,000.00375,000.00300,000.00150,000.00150,000.00150,000.00Preliminary Expenses 332,000.00Interests 35,586.0031,204.2626,482.3521,393.8715,910.3610,001.15Depreciation on: Equipment 176,666.67176,666.67176,666.67176,666.67176,666.67176,666.67Building 7,500.007,500.007,500.007,500.007,500.007,500.00(B) Increase in Expenditure 3,005,702.663,080,070.923,598,159.023,504,820.743,562,322.433,620,658.13Net Profit Before Tax 165,702.66- 309,929.08616,840.98794,479.26822,963.57852,333.59Less: Tax @30%92,978.72185,052.29238,343.78246,889.07255,700.08Profit after tax 165,702.66- 216,950.35431,788.69556,135.48576,074.50596,633.51Add: Depreciation 184,166.67184,166.67184,166.67184,166.67184,166.67184,166.67Net Cash Inflow 18,464.00401,117.02615,955.35740,302.15760,241.16780,800.18Present Value Factor@15% pa.0.870.760.660.570.500.43Present value of Net cash inflow16,055.66303,302.10405,000.64423,270.16377,974.22337,561.46Particulars Amount Amount Present value of total cash inflow 1,863,164.24$Add: Present value of working capital realized 64,849.14$ Present value of salvage 86,465.52$ 151,314.66$ 2,014,478.90$Less: Initial Investment 1,260,000.00$Net Present Value (NPV)754,478.90$ Year0123456On discounted cash flow1,260,000.00- 30,838.26312,300.20412,825.09430,210.10384,129.65343,021.06On normal cash flow1,260,000.00- 35,464.00413,017.02627,855.35752,440.15772,621.92793,428.56
3CORPORATE FINANCIAL MANAGEMENTAnswer to Question 2Requirement 2: Net Present Value exclusive of Copntract manufacturing Year 123456Increase in revenue: Sales of new product 2,380,000.002,880,000.003,630,000.003,702,600.003,776,652.003,852,185.04Contract manufacturing (A) Increase in Revenue 2,380,000.002,880,000.003,630,000.003,702,600.003,776,652.003,852,185.04Increase in expenditures: New products 714,000.00864,000.001,089,000.001,110,780.001,132,995.601,155,655.51Lost Sales net of variable cost 588,750.00720,000.00907,500.00925,650.00944,163.00963,046.26Wages100,000.00102,000.00104,040.00106,120.80108,243.22110,408.08Factory overhead 428,400.00518,400.00653,400.00666,468.00679,797.36693,393.31Repaid and Maintenance 15,000.0030,000.0030,600.0031,212.0031,836.24Advertisement 375,000.00375,000.00300,000.00150,000.00150,000.00150,000.00Preliminary Expenses 332,000.00Interests 35,586.0031,204.2626,482.3521,393.8715,910.3610,001.15Depreciation on: Equipment 176,666.67176,666.67176,666.67176,666.67176,666.67176,666.67Building 7,500.007,500.007,500.007,500.007,500.007,500.00(B) Increase in Expenditure 2,757,902.662,809,770.923,294,589.023,195,179.343,246,488.203,298,507.22Net Profit Before Tax 377,902.66- 70,229.08335,410.98507,420.66530,163.80553,677.82Less: Tax @30%21,068.72100,623.29152,226.20159,049.14166,103.35Profit after tax 377,902.66- 49,160.35234,787.69355,194.46371,114.66387,574.48Add: Depreciation 184,166.67184,166.67184,166.67184,166.67184,166.67184,166.67Net Cash Inflow 193,736.00- 233,327.02418,954.35539,361.13555,281.32571,741.14Present Value Factor@15% pa.0.870.760.660.570.500.43Present value of Net cash inflow168,466.08- 176,428.75275,469.29308,381.48276,072.96247,179.47Particulars Amount Amount Present value of total cash inflow 1,115,065.86Add: Present value of working capital realized 64,849.14 Present value of salvage 86,465.52151,314.661,266,380.52Less: Initial Investment 1,260,000.00Net Present Value (NPV)6,380.52Year0123456IRROn discounted cash flow-1260000178,466.08- 170,341.79270,176.28303,686.81271,908.99243,486.22-3%On normal cash flow-1260000-205235.9953225277.0209410904.3547531150.13546906.1045563198.418811%
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