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Total Investment
Less Woking Capital requirements
Total
Less short term investment
Long term debt requirements
95
15
80
40
40
WACC
Equity
Debt
Total Cost
WACC
Paybank Period
ARR (Average Cashflows/ Initial
Investment)
Financing
40
40
Interest Rate
20%
12%
Cost
8
4.8
12.8
16%
49.16
35%
Cash Inflows
17.3
24
29.5
32.5
38
41
46.1
49.5
55.4
60
PVIF
0.862
0.743
0.641
0.552
0.476
0.41
0.354
0.305
0.263
0.227
PV
14.91
17.83
18.91
17.94
18.09
16.81
16.32
15.1
14.57
13.62
164.1
80
84.1
110
25
85
40
45
WACC
Equity
Debt
Total Cost
WACC
Add: 2% risk
WACC
Financing
40
45
Interest Rate
0.20
11%
Cost
8
4.95
12.95
15.24%
2%
17.24%
Years
1
2
3
4
5
6
7
8
9
10
3.72
Cashflows Accumulated CF
19.9
19.9
24.1
44
25.9
69.9
27.3
97.2
29.8
127
32
159
35.1
194.1
38.2
232.3
42
274.3
45.8
320
38%
29%
Cashflows
19.9
24.1
25.9
27.3
29.8
32
35.1
38.2
42
45.8
PVIF
0.853
0.725
0.621
0.529
0.4513
0.385
0.3285
0.2802
0.2389
0.2038
PV
16.97
17.54
16.08
14.44
13.45
12.32
11.53
10.7
10.03
9.3
132.36
85
47.36
Appendix 3
Calculations of PayBack Period, ARR, NPV and IRR for Both Projects
Total Investment required
205
Total
Less short term investment
Total financing required
Less cash available
Required long term
Debt by English Electronics
Debt from other sources
205
40
165
40
125
80
45
WACC Calculations
Equity
Debt from English Electronics
Debt from other Sources
Total Cost
Add: 2% risk
WACC
Cost
8
8.8
5.4
15.45%
Payback Period
Payback Period
Accounting Rate of Return
Years
1
2
3
4
5
6
7
8
9
10
3.67
42%
Cashflows Accumulated CF
37.2
37.2
48.1
65.4
55.4
120.8
59.8
180.6
67.8
248.4
73
321.4
81.2
402.6
87.7
490.3
97.4
587.7
105.8
693.5
32%
Cashflows
37.2
48.1
55.4
59.8
67.8
73
81.2
87.7
97.4
105.8
PVIF
0.866
0.7502
0.6499
0.5629
0.4876
0.4223
0.3658
0.3168
0.2744
0.2377
PV
32.22
36.08
36
33.66
33.59
30.82
29.7
27.78
26.73
24.96
311.54
165
146.54