Buddy Capital Investment Analysis for Saturn Pet Care

ACC 515

TABLE OF CONTENTS
Part A.........................................................................................................................................3
(i)............................................................................................................................................3
(ii)...........................................................................................................................................5
A.........................................................................................................................................5
B.........................................................................................................................................6
C.........................................................................................................................................8
(iii)..........................................................................................................................................8
Part B........................................................................................................................................10
References................................................................................................................................16

PART A
(i)
Table 1: Statement for the proposed Buddy capital investment after tax cash flows
(In Million AUD)
Particulars Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Number of unit sold 16 16 16 16 16 16 16 16 16 16
selling price (per unit) 1.25 1.28 1.31 1.34 1.37 1.40 1.44 1.47 1.51 1.54
Total Revenue 20 20.47 20.95 21.44 21.95 22.46 22.99 23.53 24.08 24.65
Raw Material Cost 7 7 7 7 7 7 7 7 7 7
Fixed cost 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6
Variable Cost 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4
Gross Profit 6 6.47 6.95 7.44 7.95 8.46 8.99 9.53 10.08 10.65
Depreciation 1.95 1.95 1.95 1.95 1.95 1.95 1.95 1.95 1.95 1.95
Profit Before Tax 4.05 4.52 5 5.49 6 6.51 7.04 7.58 8.13 8.7
Tax @ 30% 1.22 1.36 1.50 1.65 1.80 1.95 2.11 2.27 2.44 2.61
Profit After Tax 2.84 3.16 3.50 3.85 4.20 4.56 4.93 5.31 5.69 6.09
Non-cash expense (Depreciation) 1.95 1.95 1.95 1.95 1.95 1.95 1.95 1.95 1.95 1.95
Residual Value 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5.00
Cash Flows after Tax 4.79 5.11 5.45 5.80 6.15 6.51 6.88 7.26 7.64 13.04
Table 2: Statement showing computation of payback period
Years Cash Flows (Amount in Million $) Cumulative Cash Flow

0 -20 -20
1 4.79 -15.21
2 5.11 -10.1
3 5.45 -4.65
4 5.8 1.15
5 6.15 7.3
6 6.51 13.81
7 6.88 20.69
8 7.26 27.95
9 7.64 35.59
10 13.04 48.63
Payback Period 3 + (1.15) / 5.80
3.19 Years
Table 3: Statement showing computation of NPV
(In Million AUD)
Particulars Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Cash Flows after Tax 4.79 5.11 5.45 5.80 6.15 6.51 6.88 7.26 7.64 13.04
Present Value Factor @ 20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162
Present Value of Cash Flows 3.99 3.55 3.16 2.80 2.47 2.18 1.92 1.69 1.48 2.11
Total Present Value of Cash Flows 25.34