| Sunrise Bakery |
| Assumptions |
| Expected Investment Cost | $300,000 |
| Risk Free Rate |
| Market Beta |
| Equity Risk Premium |
| Cost of Debt |
| Cost of Equity |
| Tax rate |
| WACC |
| Income statement (all figures are incremental) | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
| Revenue (Sales) | | $135,000 | $145,000 | $155,000 | $165,000 | $165,000 | $165,000 |
| Production Costs | | ($20,000) | ($22,000) | ($24,000) | ($26,000) | ($26,000) | ($26,000) |
| Depreciation / Amortization | | ($30,000) | ($30,000) | ($30,000) | ($30,000) | ($30,000) | ($30,000) |
| Profit Before tax | | $85,000 | $93,000 | $101,000 | $109,000 | $109,000 | $109,000 |
| Taxes | | $0 | $0 | $0 | $0 | $0 | $0 |
| Profit after tax (Net Income) | | $85,000 | $93,000 | $101,000 | $109,000 | $109,000 | $109,000 |
| Annual Investment rate recovery Sales/Cost | | 55% | 35% | 30% | 10% | 5% | 105% |
| Projected Balance Sheet | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
| Cash and Marketable Sec. | $0 | $115,675 | $238,725 | $369,775 | $508,825 | $647,825 | $786,825 |
| Other Current Assets (Inventory and Receivables) | $15,000 | $17,025 | $17,175 | $17,325 | $17,475 | $17,475 | $17,475 |
| Fixed Assets |
| At cost | $300,000 | $300,000 | $300,000 | $300,000 | $300,000 | $300,000 | $300,000 |
| Accumulated Depreciation / Amortization | $0 | $30,000 | $60,000 | $90,000 | $120,000 | $150,000 | $180,000 |
| Net Fixed Assets | $300,000 | $270,000 | $240,000 | $210,000 | $180,000 | $150,000 | $120,000 |
| Total Assets | $315,000 | $402,700 | $495,900 | $597,100 | $706,300 | $815,300 | $924,300 |
| Current Liabilities (Payables) | $0 | $2,700 | $2,900 | $3,100 | $3,300 | $3,300 | $3,300 |
| LT Debt | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Total Liabilities | $0 | $2,700 | $2,900 | $3,100 | $3,300 | $3,300 | $3,300 |
| Stock and accumulated retained earnings | $315,000 | $400,000 | $493,000 | $594,000 | $703,000 | $812,000 | $921,000 |
| Total Liabilities and Equity | $315,000 | $402,700 | $495,900 | $597,100 | $706,300 | $815,300 | $924,300 |
| Working Capital (Non-Cash Current Assets less Current Liabilities) |
| Change in working capital |
| Projected Free Cash Flows to the Project |
| Net Income |
| Depreciation / Amortization |
| Change in working capital |
| Capital Expenditures (fixed assets at cost) |
| After tax salvage value (Terminal Value) |
| Free Cash Flows |
| NPV |
| Should the company undertake the project? | | | | | | | | Number of years |
| Payback Analysis (when do cash flows sum positive?) |
| Discounted Payback Analysis |
Wale12
SUM22Case2Exhibit1.xls
