Project Cost 10,000,000
Weightage
Debt 55%
Equity 45%
Cost
Interest - Debt 15%
Cost of Equity 25% discount rate
0
Project cost is incurred in 0th period
Asset recognised worth the project cost with a useful life of 4 years and 0 salvage value
Depreciation as per IT ACT - 40% WDV
Depreciation as per Company ACT - 25% SLM
Evaluate the business proposal using NPV and IRR.
Drivers Year - 1 Growth - y/y
Sales Price/Unit 3750 10%
Cost Price/Unit 2750 10%
Quantity 25000 5%
Opex 20% <== of revenues
Tax Rate 30% <== applicable on PBT
Working Capital requirement 4% <== of revenues
Loan repayment happens at end of period
Years Year-1 Year-2
Repayment Schedule 500,000 1,000,000
Interest rate on surplus cash 12% <== compute on beginning cash value
Sensitivity of NPV
Growth in Sales Price %
2.5%
5.0%
7.5%
10.0%
12.5%
15.0%
17.5%
Year-3 Year-4
1,500,000 2,500,000
pute on beginning cash value
Debt %
0% 20% 40% 60% 80%
95%
Year - 0 Year - 1 Year - 2 Year - 3
Drivers
Sales Price/Unit 3,750 4,125 4,538
Cost Price/Unit 2,750 3,025 3,328
Volume 25,000 26,250 27,563
Year - 4
4,991
3,660
28,941
Year - 0 Year - 1 Year - 2 Year - 3 Year - 4
Income Statement
Revenue 93,750,000 108,281,250 125,064,844 144,449,895
Costs 68,750,000 79,406,250 91,714,219 105,929,923
Gross Profit 25,000,000 28,875,000 33,350,625 38,519,972
Operating Costs 18,750,000 21,656,250 25,012,969 28,889,979
EBITDA 6,250,000 7,218,750 8,337,656 9,629,993
Depreciation 2,500,000 2,500,000 2,500,000 2,500,000
EBIT 3,750,000 4,718,750 5,837,656 7,129,993
Interest Expense 825,000 750,000 600,000 375,000
Interest Income - 89,700 537,260 1,023,631
EBT 2,925,000 4,058,450 5,774,916 7,778,624
Tax Expense 877,500 1,217,535 1,732,475 2,333,587
PAT / Net Income 2,047,500 2,840,915 4,042,441 5,445,037
Year - 0Year - 1 Year - 2 Year - 3 Year - 4
Opening Debt 5500000 5000000 4000000 2500000
Interest 825000 750000 600000 375000
Repayment 500000 1000000 1500000 2500000
Closing debt 5500000 5000000 4000000 2500000 0
Year - 0 Year - 1 Year - 2 Year - 3
Balance Sheet
Cash - 747,500 4,477,165 8,530,262
Working Capital - 3,750,000 4,331,250 5,002,594
PPE, Gross (Fixed Asset) 10,000,000 10,000,000 10,000,000 10,000,000
Accumulated Depreciation - 2,500,000 5,000,000 7,500,000
PPE, Net 10,000,000 7,500,000 5,000,000 2,500,000
Total Assets 10,000,000 11,997,500 13,808,415 16,032,856
Debt 5,500,000 5,000,000 4,000,000 2,500,000
Deferred Tax Liability - 450,000 420,000 102,000
Equity 4,500,000 4,500,000 4,500,000 4,500,000
Retained Earning - 2,047,500 4,888,415 8,930,856
Total Liabilities & Sh Equity 10,000,000 11,997,500 13,808,415 16,032,856
check - - - -
Year - 4
12,709,098
5,777,996
10,000,000
10,000,000
-
18,487,093
-
- 388,800
4,500,000
14,375,893
18,487,093
-
Year - 0 Year - 1 Year - 2 Year - 3
Cash Flow Statement
Net Income / PAT - 2,047,500 2,840,915 4,042,441
Add: Depreciation - 2,500,000 2,500,000 2,500,000
Less:Working Capital Change - - 3,750,000 - 581,250 - 671,344
Change in DTL - 450,000 - 30,000 - 318,000
Cash flow from Operations (CFO - 1,247,500 4,729,665 5,553,097
Purchase of Asset - 10,000,000 - - -
Cash flow from Investing (CFI) - 10,000,000 - - -
Debt Raised / (Repaid) 5,500,000 - 500,000 - 1,000,000 - 1,500,000
Equity Raised 4,500,000 - - -
Cash flow from Financing (CFF) 10,000,000 - 500,000 - 1,000,000 - 1,500,000
Net Cash change (CFO + CFI + CF - 747,500 3,729,665 4,053,097
Cash - BOP - - 747,500 4,477,165
Cash - EOP - 747,500 4,477,165 8,530,262
Year - 4
5,445,037
2,500,000
- 775,402
- 490,800
6,678,835
-
-
- 2,500,000
-
- 2,500,000
4,178,835
8,530,262
12,709,098
Year - 0 Year - 1 Year - 2 Year - 3 Year - 4
Deferred Tax Schedule
Depreciation IT - WDV
PPE, BOP 10000000 10000000 6000000 3600000 2160000
Depreciation IT 0 4,000,000 2,400,000 1,440,000 864,000
PPE, EOP 10000000 6000000 3600000 2160000 1296000
PBT 0 2925000 4058450 5774916 7778624
Add: Dep SLM 0 2500000 2500000 2500000 2500000
Less: Dep IT 0 4000000 2400000 1440000 864,000
Adjusted PBT / Taxable Income 0 1425000 4158450 6834916 9414624
Income Tax Payable @ 30% 0 427500 1247535 2050475 2824387
Book Profit
Income Tax Expense @ 30%
Income Tax Payable 0 427500 1247535 2050475 2824387
Change in Deferred Tax Liability 0 450000 -30000 -318000 -490800
Income Tax Expense 0 877500 1217535 1732475 2333587
Deferred Tax Liability 0 450000 420000 102000 -388800
Company Act SLM Income Tax Act WDV
40%
Helps us in prepparing financials of any company Calculation of Tax
Equipment 200
1000
5 years
Year-1 Year-2 Year-3 Year-4 Year-5 Year-1 Year-2
Gross 1000 1000 1000 1000 1000 Gross 1000 600
Acc Dep 200 400 600 800 1000 Acc Dep 400 240
Net 800 600 400 200 0 Net 600 360
Dep 200 200 200 200 200 400 240
PBDT 1000 1000 1000 1000 1000 PBDT 1000 1000
D 200 200 200 200 200 D 400 240
PBT 800 800 800 800 800 PBT 600 760
Tax Show @50% 400 400 400 400 400 Tax Paid 300 380
Tax expence DTL 100 20
100 120
Cumilative
Year-3 Year-4 Year-5
360 216 129.6
144 86.4 51.84
216 129.6 77.76
144 86.4 51.84
1000 1000 1000
144 86.4 51.84
856 913.6 948.16
428 456.8 474.08
-28 -56.8 -74.08
92 35.2 -38.88
As per company's act
SLM 20% Depreciation rate
1 2 3 4 5
Opening Fixed Asset 1000 800 600 400 200
less depreciation 200 200 200 200 200
Closing Fixed Asset 800 600 400 200 0
EBITDA 800 800 800 800 800
Dep 200 200 200 200 200
EBT 600 600 600 600 600
Tax 30%(tax expence) 180 180 180 180 180
As per income tax act
WDM 40% Depreciation Rate
1 2 3 4 5
Opening Fixed Asset 1000 600 360 216 129.6
less depreciation 400 240 144 86.4 51.84
Closing Fixed Asset 600 360 216 129.6 77.76
EBITDA 800 800 800 800 800
Dep 400 240 144 86.4 51.84
EBT 400 560 656 713.6 748.16
Tax 30% (Tax Paid) 120 168 196.8 214.08 224.448
DTL 60 12 -16.8 -34.08 -44.448
CUM DTL
60 72 55.2 21.12 -23.328
