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Revenue $15,000 pa
Depreciation 10000 year 1
-2000 for every year
ALTERNATIVE 2
Revenue $15,000 pa
Depreciation Straight Line Dep.
Final BV 0
ALTERNATIVE 3
Revenue $18,000 pa
Depreciation Straight Line Dep.
Final BV 0
Remaining Loan
Remaining Loan *0.1 Remaining loan-Annuity+interest
20000
20000*0.1 16724.050384105 20000-5276+2000
16724*0.1 13120.505806621 16724-5276+1672.4
13121*0.1 9156.6067713879 13120.5-5276+1312
9157*0.1 4796.3178326318 9157-5276+916
4796*0.1 0.00 4796-5276+480
Income Tax (calcs) Profit (calcs)
Taxable Income * tax rate (=40%) Profit=Income-Income Tax
5275.9496158949 A=P(1+i)^n*(i/((1+i)^n-1))
CM OC Life
Pump A $8,000 1800 4
Pump B $16,000 1600 7
Pump A NPV:
P1 P2 P3 P4
Value 8000 $5,880.24 $4,322.15 $3,176.91
Calcs 8000/(1.08)^4 8000/(1.08)^8 8000/(1.08)^12
Pump B NPV:
P1 P2 P3 P4
Value 16000 $9,335.85 $5,447.38 $3,178.49
Calcs 16000/(1.08)^7 16000/(1.08)^14 16000/(1.08)^21
Calculation of Total Average Annual Cost (to assess the economic life)
Capital 100000
Maintenance Year*7500
Project Life 10 years
Discount rate 8% pa
P5
$2,523.19
16000/(1.08)^28
NPV
36484.9043444414
SUM(P1:P8)
Sensitivity Analysis
NPV obtained by changing one variable and Finding
Variation in Revenue
-30% -20% -10%
Revenue 66.5 76 85.5
NPV (d(Revenue)) 37.7011390711306 74.2962093704419 110.891279669753
Working Capital 21 24 27
NPV(d(Working Capital)) 150.638078511589 149.587502330747 148.536926149906
Tax Rate 31.5 36 40.5
NPV((d(Tax Rate)) 195.241801366901 179.323317567622 163.404833768343
Sensitivity Analysis
300
250
200
Revenue
150 Working Capital
NPV
Tax Rate
100
50
0
-40% -30% -20% -10% 0% 10% 20% 30% 40%
% Change from Most Likely Value
(recovered)
in Year 2
eclining (40%)
90
150
150*0.4 90 95 30 65 95-30
90*0.4 54 95 30 65 95-30
54*0.4 32.4 95 30 65 95-30
32.4*0.4 19.44 95 30 65 95-30
19.44*0.4 11.664 95 30 65 95-30
11.664 95 30 65 95-30
11.664 95 30 65 95-30
11.664 95 30 65 95-30
11.664 95 30 65 95-30
11.664 95 30 86.664 95-30+BV+LS
NPV
Cumulative DCF
SUM(DCF)
-10
-95.7142857142857
-177.34693877551
-123.14112946766
-80.4017359022218
-44.774801112901
-13.7456724899567
14.1480011725865
38.345008365112
61.3897771198983
83.3371759339804
104.239460518821
147.486349969064
147.486349969064
Plot cumulative discounted cash flow vs. time. Define the break-even point.
Sensitivity Analysis
NPV obtained by changing one variable and Finding
Variation in Revenue
-30% -20% -10% 0% 10% 20% 30%
Revenue 66.5 76 85.5 95 104.5 114 123.5
NPV (d(Rev 37.7011390711306 74.29621 110.8913 147.4863 184.0814 220.6765 257.2716
Working Ca 21 24 27 30 33 36 39
NPV(d(Work150.638078511589 149.5875 148.5369 147.4863 146.4358 145.3852 144.3346
Tax Rate 31.5 36 40.5 45 49.5 54 58.5
NPV((d(Tax 195.241801366901 179.3233 163.4048 147.4863 131.5679 115.6494 99.7309
Sensitivity Analysis
300
250
200 Revenue
150 Working
NPV
Capital
100 Tax Rate
50
0
-40%-20% 0% 20% 40%
% Change from Most Likely Value
Capital
N
100 Tax Rate
50
0
-40%-20% 0% 20% 40%
% Change from Most Likely Value
of Revenue)