BETHESDA MINING COMPANY

in thousand
Quantity Sales revenue ($) Total Sales
Year Produced
(ton) 34 40 Revenue
1 650 20400 2000 22400
2 725 20400 5000 25400
3 810 20400 8400 28800
4 740 20400 5600 26000

MACRS Schedule
Year 7 Years
1 0.143
2 0.245
3 0.175
4 0.125
5 0.89
6 0.89
7 0.89

In thousand USD
New Mining Equipment 30,000
0 1 2 3 4 5 6
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Investments:
1 New Mining Equipment (30,000) 14,716.8
2 Accumulated depreciation 4,290 11,640 16,890 20,640
3 Adjusted basis of new
mining equipment after
depreciation (end of year) 25,710 18,360 13,110 9,360
4 Opportunity Cost
- Land (5,000) 5,000
5 Net Working capital (end o 5% - 1,120 1,270 1,440 1,300
6 Change in net working capital (1,120) (150) (170) 140
7 Total Cash Flow of Investment (35,000) (1,120) (150) (170) 5,140 - -

Income:
8 Sales revenue 22,400 25,400 28,800 26,000
9 Operating Costs:
- Fixed cost (2,500) (2,500) (2,500) (2,500)
- Variable Cost 13 (8,450) (9,425) (10,530) (9,620)
-Land reclaiming (4,000)
-Charitable expense (6,000)
10 Depreciation (4,290) (7,350) (5,250) (3,750)
11 Income before taxes 7,160 6,125 10,520 6,130 - (6,000)
12 Tax at 38% 38% 2,721 2,328 3,998 2,329 - -
13 Net Income 4,439 3,798 6,522 3,801 - (6,000)
* The taxable amount $8.640 = (60% x 30.000) - $9.360. The aftertax salvage value is $18.000 - (38%($18.000-$9.360)) = $ 14.716,8

1 Net Present Value

Cash Inflow Year 0 1 2 3 4 5 6
Total Inflow - 8,729 11,148 11,772 22,267 - (6,000)
Cash Outflow
Total Outflow 35,000 - - - - - -
Net Cash Flow (35,000) 8,729 11,148 11,772 22,267 - (6,000)

DCF 12% 1.0000 0.8929 0.7972 0.7118 0.6355 0.5674 0.5066

Present Value -35,000 7,794 8,887 8,379 14,151 - (3,040)

NPV 32,296

2 IRR 13.51%

3 Year 0 1 2 3 4 5 6
Accumulated NCF (35,000) (26,271) (15,123) (3,351) 18,917 18,917 12,917
Payback Period 3.1505

4 Profitability Index
Year 0 1 2 3 4 5 6
PV Cash Inflow - 7,794 8,887 8,379 14,151 - (3,040)
PV Cash Outflow 35,000 - - - - - -
Profitability Index 1.0335

5 Average Accounting Return

Average net income= 2,093
Average investment= 35,000
AAR= 6%

6 Modified IRR 5.99%

 GOODWEEK TIRES,INC.

Growth of Sales 2%
Inflation Rate 3.25%
Market share
- OEM Market 11%
- Replacement Market 8%

in thousand
Industry Quantity Produced (unit) Quantity Produced (unit) Price ($/unit) Sales revenue ($) Total Sales Variable Cost Variable Cost Total Variable
Year
OEM Replacement OEM Replacement OEM Replacement OEM Replacement Revenue per unit OEM Replacement Cost
1 8,000 14,000 880 1,120 38.00 59.00 33,440.00 51,920.00 85,360.00 18 15,840 20,160 36,000
2 8,160 14,280 898 1,142.4 39.62 61.51 35,558.42 70,266.17 105,824.59 18.77 16,843.46 21,437.14 38,280.60
3 8,323 14,565.60 916 1,165.25 41.30 64.12 37,811.05 74,717.53 112,528.58 19.56 17,910.50 22,795.18 40,705.68
4 8,490 14,856.91 934 1,188.55 43.05 66.85 40,206.38 79,450.89 119,657.27 20.39 19,045.13 24,239.25 43,284.38

MACRS Schedule
Year 7 Years
1 0.143
2 0.245
3 0.175
4 0.125
5 0.89
6 0.89
7 0.89

New Equipment 120,000 In thousand USD

0 1 2 3 4
Year 0 Year 1 Year 2 Year 3 Year 4

Investments:
1 New Equipment (120,000) 45,576
2 Accumulated depreciation 17,160 46,560 67,560 82,560
Adjusted basis of new equipment after
3 102,840 73,440 52,440 37,440
depreciation (end of year)
4 Opportunity Cost - - - - -
5 Net Working capital (end of year) 15% 11,000 12,804 15,874 16,879 17,949
6 Change in net working capital (11,000) (1,804) (3,070) (1,006) (1,069)
7 Total Cash Flow of Investment (131,000) (1,804) (3,070) (1,006) (1,069)

Income:
8 Sales revenue 85,360 105,825 112,529 119,657
9 Operating Costs:
- Marketing&General Administration Cost 25,000 25,813 26,651 27,518
- Variable Cost 36,000 38,281 40,706 43,284
10 Depreciation 17,160 29,400 21,000 15,000
11 Income before taxes 7,200 12,331 24,171 33,855
12 Tax at 40% 40% 2,880 4,933 9,669 13,542
13 Net Income 4,320 7,399 14,503 20,313
* The taxable amount is $ 13.560 (=$51.000 - $37.440). The aftertax salvage value $51.000 - ( 40%x($51.000 - $37.440)) = $ 45.576

1 Net Present Value

Cash Inflow Year 0 1 2 3 4
Total Inflow - 21,480 36,799 35,503 80,889
Cash Outflow
Total Outflow 131,000 - - - -
Net Cash Flow (131,000) 21,480 36,799 35,503 80,889

DCF 15.9% 1.0000 0.8628 0.7444 0.6423 0.5542

Present Value -131,000 18,533 27,395 22,804 44,829

NPV (17,439)

2 IRR 10.25%

3 Year 0 1 2 3 4
Payback Period 3.5399
Accumulated NCF (131,000) (109,520) (72,721) (37,218) 43,671

4 Profitability Index
Year 0 1 2 3 4
PV Cash Inflow - 18,533 27,395 22,804 44,829
PV Cash Outflow 131,000 - - - -
Profitability Index 0.8669

5 Average Accounting Return

Average net income= 11,634
Average investment= 65,500
AAR= 17.76%

6 Modified IRR 7.46%

 Price ($/unit)
Year
OEM Replacement
1 38 59
2 39.62 61.51
3 41.30 64.12
4 43.05 66.85

New Mining Equipment 30,000

0 1 2 3 4
Year 0 Year 1 Year 2 Year 3 Year 4
Investments:
1 New Mining Equipment (30,000.00) 14,716.80
2 Accumulated depreciation 4,290.00 11,640.00 16,890.00 20,640.00
Adjusted basis of new mining equipment
3 25,710.00 18,360.00 13,110.00 9,360.00
after depreciation (end of year)
4 Opportunity Cost
- Land (5,000.00) 5,000.00
5 Net Working capital (end of year) 0.05 1,120.00 1,270.00 1,440.00 1,300.00
6 Change in net working capital (150.00) (170.00) 140.00
7 Total Cash Flow of Investment (35,000.00) - (150.00) (170.00) 19,856.80
Income:
8 Sales revenue 22,400.00 25,400.00 28,800.00 26,000.00
9 Operating Costs:
- Fixed cost 2,500.00 2,500.00 2,500.00 2,500.00
- Variable Cost 13 8,450.00 9,425.00 10,530.00 9,620.00
-Land reclaiming
-Charitable expense
10 Depreciation 4,290.00 7,350.00 5,250.00 3,750.00
11 Income before taxes 7,160.00 6,125.00 10,520.00 10,130.00
12 Tax at 38% 0.38 2,720.80 2,327.50 3,997.60 3,849.40
13 Net Income 4,439.20 3,797.50 6,522.40 6,280.60
* The taxable amount $8.640 = (60% x 30.000) - $9.360. The aftertax salvage value is $18.000 - (38%($18.000-$9.360)) = $ 14.716,8
 Varia
Sales revenue ($) ble Variable Cost
Year Cost
OEM Replacement Total Sales Revenue per OEM Replacement
33,440 51,920 85,360 1 18
unit 15,840 20,160
35,558.42 70,266.17 105,825 2 19 16,843 21,437
37,811.05 74,717.53 112,529 3 20 17,910 22,795
40,206.38 79,450.89 119,657 4 20 19,045 24,239

In thousand USD

5 6
Year 5 Year 6

- -

1 Net Present Value

Cash Inflow
Total Inflow - 4,439.20

4,000.00 Cash Outflow

(6,000.00) Total Outflow (35,000.00) -
Net Cash Flow (35,000.00) 4,439.20
(4,000.00) 6,000.00
2,280.00 DCF 0.12 1.0000 0.8929
(4,000.00) 3,720.00 Present Value (35,000.00) 3,963.57
 NPV (6,590.54)

2 IRR 0.04

3 Payback Period 10.38

Accumulated NCF (35,000.00) (30,560.80)

4 Profitability Index
PV Cash Inflow - 3,963.57
PV Cash Outflow (35,000.00) -
Profitability Index (0.67)

5 Average Accounting Return

Average net income= 3,459.95
Average investment= 5,833.33
AAR= 0.59

6 Modified IRR 0.08

Total Variable
Cost
36,000
38,281
40,706
43,284

3,797.50 6,522.40 6,280.60 (4,000.00) 3,720.00

(150.00) (170.00) 19,856.80 - -

3,647.50 6,352.40 26,137.40 (4,000.00) 3,720.00

0.7972 0.7118 0.6355 0.5674 0.5066

2,907.76 4,521.51 16,610.79 (2,269.71) 1,884.67
(26,913.30) (20,560.90) 5,576.50 1,576.50 5,296.50

3,027.34 4,642.52 3,991.43 (2,269.71) 1,884.67

(119.58) (121.00) 12,619.36 - -