200426 Corporate Finance Assignment
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Corporate Finance (200426)
Added on 2020-05-03
200426 Corporate Finance Assignment
Corporate Finance (200426)
Added on 2020-05-03
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Running head: FINANCEFinanceName of the Student:Name of the University:Authors Note:
FINANCE1Table of ContentsIntroduction..................................................................................................................................................................................................................................................................................................................................................2Calculation showing NPV, Payback period and IRR..................................................................................................................................................................................................................................................................................2Analyzing the forecasted sales for contract Manufacturing........................................................................................................................................................................................................................................................................4Summary of the firms Recommendation.....................................................................................................................................................................................................................................................................................................5Other factors that should be considered.......................................................................................................................................................................................................................................................................................................6Conclusion...................................................................................................................................................................................................................................................................................................................................................7Reference.....................................................................................................................................................................................................................................................................................................................................................8
FINANCE2IntroductionIn this report an attempt has been made to evaluate an investment or a project considering some key factors such as the project’s Net Present Value, Payback Period and Internal Rate of Return and to produce a reportstating whether the project is desirable or not. Thus in this report an extended calculation is performed considering 10 years of the project in order to figure out the project NPV, Payback Period and IRR. Then according to theoutcome of the calculations appropriate recommendations or suggestions is provided in the later part regarding the acceptance of the project. To end the report on a suitable note, an overall conclusion is added at the end.Calculation showing NPV, Payback period and IRRStatement showing calculationParticularsYear 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10TotalSalesNew product$1,500,000.00$2,000,000.00$2,750,000.00$3,000,000.00$3,060,000.00$3,121,200.00$3,183,624.00$3,247,296.48$3,312,242.41$3,378,487.26Contract manufacturing$250,000.00$300,000.00$375,000.00$450,000.00$500,000.00$510,000.00$520,200.00$530,604.00$541,216.08$552,040.40Total Sales$1,750,000.00$2,300,000.00$3,125,000.00$3,450,000.00$3,560,000.00$3,631,200.00$3,703,824.00$3,777,900.48$3,853,458.49$3,930,527.66Profit on sale of Equipment$185,000.00Total Revenue$1,750,000.00$2,300,000.00$3,125,000.00$3,450,000.00$3,560,000.00$3,631,200.00$3,703,824.00$3,777,900.48$3,853,458.49$4,115,527.66Less:Cost of raw materialNew product$450,000.00$600,000.00$825,000.00$900,000.00$918,000.00$936,360.00$955,087.20$974,188.94$993,672.72$1,013,546.18Contract manufacturing$67,500.00$81,000.00$101,250.00$121,500.00$135,000.00$137,700.00$140,454.00$143,263.08$146,128.34$149,050.91Additional Wages$150,000.00$153,000.00$156,060.00$159,181.20$162,364.82$165,612.12$168,924.36$172,302.85$175,748.91$179,263.89Loss of sale for the current product$575,000.00$750,000.00$1,000,000.00$1,020,000.00$1,040,400.00$1,061,208.00$1,082,432.16$1,104,080.80$1,126,162.42$1,148,685.67Variable cost$155,250.00$202,500.00$270,000.00$275,400.00$280,908.00$286,526.16$292,256.68$298,101.82$304,063.85$310,145.13Depreciation$10,500.00$10,500.00$10,500.00$10,500.00$10,500.00$10,500.00$10,500.00$10,500.00$10,500.00$10,500.00Interest on loan$36,049.00$30,899.14$25,749.29$20,599.43$15,449.57$10,299.71$5,149.86Primary Expenses written off$33,200.00$33,200.00$33,200.00$33,200.00$33,200.00$33,200.00$33,200.00$33,200.00$33,200.00$33,200.00Advertising Cost$375,000.00$375,000.00$300,000.00$275,000.00$150,000.00$150,000.00$150,000.00$150,000.00$150,000.00$150,000.00Total Cost$1,852,499.00$2,236,099.14$2,721,759.29$2,815,380.63$2,745,822.40$2,791,405.99$2,838,004.26$2,885,637.49$2,939,476.24$2,994,391.77Net profit-$102,499.00$63,900.86$403,240.71$634,619.37$814,177.60$839,794.01$865,819.74$892,262.99$913,982.25$1,121,135.89Less:
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