TABLE OF CONTENTSQuestion 7........................................................................................................................................1CM 004........................................................................................................................................1TS-L12.........................................................................................................................................3YTable 1Calculation of cost of capital...............................................................................................1Table 2Calculation of NPV for CM004...........................................................................................1Table 3Calculation of NPV for CM004 when sales value increase by 10%...................................2Table 4Calculation of NPV for CM004 when sales value decrease by 10%..................................3Table 5Calculation of NPV for TS L12...........................................................................................3Table 6Calculation of NPV for TS L12 when sales value increase by 10%...................................4Table 7Calculation of NPV for TSL12 when sales value increase by 10%....................................5
Question 7 CM 004Table Calculation of cost of capitalDebt Equity WeightageE/(D+E) @ Enterprise Value50.00%D/(D+E) @ Enterprise Value50.00%Interest Rate (%)7%Tax Rate (@)35%WACC CalculationWACC2.112500%Table Calculation of NPV for CM004Sales price1575Cost of compressor280Warranty cost40Net revenue per unit1255Number of units42500Net revenue amount53337500Investment amount14000000PV@2.11%PV of cash flow1533375000.97931203352234055.582533375000.95905205951153439.173533375000.93921122250095178.534533375000.91978085149058811.145533375000.90075245548043884.09653337500.88211771947049953.82 | P a g e
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