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Corporate Financial Management Report

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Added on  2020-05-28

Corporate Financial Management Report

   Added on 2020-05-28

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CORPORATE FINANCIALMANAGEMENT
Corporate Financial Management Report_1
ContentsSolution 1:.............................................................................................................................................3Solution 2:.............................................................................................................................................5References...........................................................................................................................................10
Corporate Financial Management Report_2
Solution 1:Part a.Following the information provided:ParticularsAmountCapital Investment220000Salvage Value40000Life of the Machine (years)3Sale units6000Growth in sale unit10%Sale Price60Growth in Sale Price5%Variable Cost36Growth in Variable Cost3%One time Fixed Overhead Cost60000Inspection Charges incurred at the end of year 23000Working Capital Invested30000Recoverable Working capital80%Cost of Capital12%Tax Rate15%CALCULATION OF NET PRESENT VALUEParticulars0123No. of Units- 6,000 6,600 7,260 INITIAL CASH FLOWSCapital Investment -2,20,000 - - - Working Capital Invested -30,000 - - - Net Initial Cash Flows (a) -2,50,000 - - - OPERATING CASH FLOWSSales- 3,60,000 4,15,800 4,80,249 Variable Cost- -2,16,000 -2,44,728 -2,77,277 Depreciation- -60,000 -60,000 -60,000 Fixed Overhead Paid- -60,000 - - Inspection Charges- - -3,000 - Profit Before Tax- 24,000 1,08,072 1,42,972 Tax @ 15%- 3,600 16,211 21,446 Profit After Tax- 20,400 91,861 1,21,526 Cash Flow after Tax (PAT + Depreciation)- 80,400 1,51,861 1,81,526 Net Operating Cash Flows (b)- 80,400 1,51,861 1,81,526 TERMINAL CASH FLOWSSalvage of Machine- - - 40,000
Corporate Financial Management Report_3

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