CUPPAMANIA

Year 0 1 2 3

Investment Cash flow

Pkg Eqipment -1000000
Production M/C OC -75000 -500000
Change in NWC on incremental basis -30000 -10000 -15000 10000
Investment Cash flow -1105000 -510000 -15000 10000
PV of Investment CF Rs. -1,583,164.89
Operating Cashflow
Gross Profits 500000 500000 500000
Depreciation of pkg equipment 200000 200000 200000
Depreciation of prod m/c(existing 1/3 share only yr-1) 100000 100000 100000
R& D expense (reduce for tax benefits) 100000 0 0
Allocated Overheads 2500 3000 3500
EBIT 97500 197000 196500
Taxes 40 39000 78800 78600
NOPAT 58500 118200 117900

Add Depreciation 358500 418200 417900

Add R&D Expense 458500 418200 417900
Operating Cash Flow 458500 418200 417900
PV of Operating CF Rs. 1,581,335.43
Terminal Cashflow
Salvage Value of Production M/C
Release of NWC

Terminal Cash Flows 0 0 0

PV of terminal CF Rs. 80,115.93
FCFF -1105000 -51500 403200 427900
NPV Rs. 98,716.78
Discounted pay back (4 yrs and 4 months) -1105000 -46396.4 327246.2 312876.8
-25000 -25000 -25000
PV Rs. -92,397.43

NPV of cuppamania Rs. 6,319.36

 4 5 Sunk Cost Incidental Benefit
R&D 100000 Tax rebate for R&D

10000
10000 0

500000 500000
200000 200000
100000 100000 Yr2-5 depreciation expense for new production m/c bought in yr-1
0 0
3500 3500
196500 196500
78600 78600
117900 117900

417900 417900
417900 417900
417900 417900

100000
35000

0 135000

427900 552900

281871 328119.2
-25000 -25000