Calculation of net cash inflow per year-
|
Sale value of normal clubs |
43710000 |
| Sale
value of low valued clubs |
4731000 |
|
Less-Variable cost of normal clubs |
19505000 |
|
Less-Variable cost of low valued clubs |
1653000 |
|
Less-opportunity cost of high valued clubs |
7656000 |
|
Less-Fixed cost |
9300000 |
|
Less-Depreciation |
4100000 |
| Profit
before tax |
6227000 |
| Tax
@25% |
1556750 |
| Profit
after Tax |
4670250 |
|
Add-Depreciation |
4100000 |
|
Net cash inflow per year |
8770250 |
Calculation of cash outflows-
|
Plant and Equipment |
28700000 |
| Marketing
study cost |
140000 |
| R&D
cost |
1000000 |
| Working
capital required |
2320000 |
|
Total |
32160000 |
PV factor = (1/1.12)^1+(1/1.12)^2....+(1/1.12)^7
= 4.5638
NPV = PV of net cash inflow - PV of cash outflow
= (8770250*4.5638 + 2320000*0.4523) - 32160000
= 41075002.95 - 32160000
= $8915002.95
Notes-
In PV of cash inflow return of working capital at year end of 7
will also be included i.e. (2320000*0.4523)
