Finance Assignment - Financial Analysis

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Comp TS-L12

Compressor TS - L12 Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
OPERATING SUMMARY
Inflation Factor 3.50%
Price per refrigerator 1,517 1,570 1,625 1,682 1,741 1,802 1,865 1,930 1,998 2,068 2,140 2,215 2,292 2,373 2,456 2,542 2,630 2,723 2,818 2,916
Units sold 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025
Revenue ($000) 63,752 65,983 68,293 70,683 73,157 75,717 78,367 81,110 83,949 86,887 89,928 93,076 96,334 99,705 103,195 106,807 110,545 114,414 118,419 122,563
Expenses ($000)
Labor @ $250/unit (10,506) (10,874) (11,255) (11,648) (12,056) (12,478) (12,915) (13,367) (13,835) (14,319) (14,820) (15,339) (15,876) (16,431) (17,006) (17,602) (18,218) (18,855) (19,515) (20,198)
Parts @ $300/unit (12,608) (13,049) (13,505) (13,978) (14,467) (14,974) (15,498) (16,040) (16,602) (17,183) (17,784) (18,407) (19,051) (19,718) (20,408) (21,122) (21,861) (22,626) (23,418) (24,238)
Compressor (TS - L12) @ $260/unit (10,927) (11,309) (11,705) (12,114) (12,538) (12,977) (13,431) (13,902) (14,388) (14,892) (15,413) (15,952) (16,511) (17,089) (17,687) (18,306) (18,946) (19,610) (20,296) (21,006)
Gross Profit ($000) 29,712 30,752 31,828 32,942 34,095 35,288 36,523 37,802 39,125 40,494 41,911 43,378 44,896 46,468 48,094 49,777 51,520 53,323 55,189 57,121
Training
Sales/Administration - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0
Warranty (Refrigerator & Compressor) per unit: (19,204) (19,876) (20,572) (21,292) (22,037) (22,808) (23,607) (24,433) (25,288) (26,173) (27,089) (28,037) (29,019) (30,034) (31,086) (32,174) (33,300) (34,465) (35,671) (36,920)
Depreciation (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (11,000)
EBIT ($000) 9,958 10,325 10,706 11,100 11,508 11,930 12,367 12,819 13,287 13,771 14,272 14,791 15,328 15,883 16,459 17,054 17,670 18,308 18,968 19,651
Taxes @ 40% (3,983) (4,130) (4,282) (4,440) (4,603) (4,772) (4,947) (5,127) (5,315) (5,508) (5,709) (5,916) (6,131) (6,353) (6,583) (6,822) (7,068) (7,323) (7,587) (7,860)
NOPAT ($000) 5,975 6,195 6,424 6,660 6,905 7,158 7,420 7,691 7,972 8,262 8,563 8,874 9,197 9,530 9,875 10,232 10,602 10,985 11,381 11,791
Operating Cash Flow ($000) 6,525 6,745 6,974 7,210 7,455 7,708 7,970 8,241 8,522 8,812 9,113 9,424 9,747 10,080 10,425 10,782 11,152 11,535 11,931 12,341
INVESTMENT SUMMARY
Plant and Equipment (3,000) (5,000) (3,000) (11,000)
Working Capital @ 12% of Revenue (7,650) 7,650
SALVAGE SUMMARY
Plant & Equipment
Gross Salvage Value - 0
Less: Taxes @ 40% - 0
Net Salvage Value ($000) - 0
Incremental Cash Flow ($000) ---> (3,000) (5,000) (10,650) 6,525 6,745 6,974 7,210 7,455 7,708 7,970 8,241 8,522 8,812 9,113 9,424 9,747 10,080 10,425 10,782 11,152 11,535 11,931 19,991
Net Present Value ($000) @ 11.44% ---> $ 35,392
Internal Rate of Return ---> 32.21%
&C&"-,Bold"&20Tesca Works: Compressor Project Evaluation
&LGJS File: &F&RCreated: 4/19/2010 Revised: &D

Comp CM004

Compressor MC 004 Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
OPERATING SUMMARY
Inflation Factor 3.50%
Price per refrigerator 1,517 1,570 1,625 1,682 1,741 1,802 1,865 1,930 1,998 2,068 2,140 2,215 2,292 2,373 2,456 2,542 2,630 2,723 2,818 2,916
Units sold 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025 42,025
Revenue ($000) 63,752 65,983 68,293 70,683 73,157 75,717 78,367 81,110 83,949 86,887 89,928 93,076 96,334 99,705 103,195 106,807 110,545 114,414 118,419 122,563 1,802,884
Expenses ($000)
Labor @ $250/unit (10,506) (10,874) (11,255) (11,648) (12,056) (12,478) (12,915) (13,367) (13,835) (14,319) (14,820) (15,339) (15,876) (16,431) (17,006) (17,602) (18,218) (18,855) (19,515) (20,198)
Parts @ $300/unit (12,608) (13,049) (13,505) (13,978) (14,467) (14,974) (15,498) (16,040) (16,602) (17,183) (17,784) (18,407) (19,051) (19,718) (20,408) (21,122) (21,861) (22,626) (23,418) (24,238)
Compressor (MC - 004) @ $280/unit (11,767) (12,179) (12,605) (13,046) (13,503) (13,976) (14,465) (14,971) (15,495) (16,037) (16,599) (17,179) (17,781) (18,403) (19,047) (19,714) (20,404) (21,118) (21,857) (22,622) (332,767)
Gross Profit ($000) 28,871 29,882 30,928 32,010 33,130 34,290 35,490 36,732 38,018 39,348 40,726 42,151 43,626 45,153 46,734 48,369 50,062 51,814 53,628 55,505
Training
Sales/Administration (500) (518) (536) (554) (574) (594) (615) (636) (658) (681) (705) (730) (756) (782) (809) (838) (867) (897) (929) (961)
Warranty (Refrigerator & Compressor) per unit: (17,668) (18,286) (18,926) (19,589) (20,274) (20,984) (21,718) (22,478) (23,265) (24,079) (24,922) (25,794) (26,697) (27,632) (28,599) (29,600) (30,636) (31,708) (32,818) (33,966)
Depreciation (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (11,000)
EBIT ($000) 10,153 10,528 10,916 11,317 11,732 12,162 12,607 13,068 13,544 14,038 14,548 15,077 15,624 16,190 16,776 17,382 18,010 18,659 19,332 20,027
Taxes @ 40% (4,061) (4,211) (4,366) (4,527) (4,693) (4,865) (5,043) (5,227) (5,418) (5,615) (5,819) (6,031) (6,249) (6,476) (6,710) (6,953) (7,204) (7,464) (7,733) (8,011)
NOPAT ($000) 6,092 6,317 6,549 6,790 7,039 7,297 7,564 7,841 8,127 8,423 8,729 9,046 9,374 9,714 10,065 10,429 10,806 11,196 11,599 12,016
Operating Cash Flow ($000) - 0 6,642 6,867 7,099 7,340 7,589 7,847 8,114 8,391 8,677 8,973 9,279 9,596 9,924 10,264 10,615 10,979 11,356 11,746 12,149 12,566
INVESTMENT SUMMARY
Plant and Equipment (3,000) (5,000) (3,000) (11,000)
Working Capital @ 12% of Revenue (7,650) 7,650
SALVAGE SUMMARY
Plant & Equipment
Gross Salvage Value - 0
Less: Taxes @ 40% - 0
Net Salvage Value ($000) - 0
Incremental Cash Flow ($000) ---> (3,000) (5,000) (10,650) 6,642 6,867 7,099 7,340 7,589 7,847 8,114 8,391 8,677 8,973 9,279 9,596 9,924 10,264 10,615 10,979 11,356 11,746 12,149 20,217
Net Present Value ($000) @ 11.44% ---> $ 36,312
Internal Rate of Return ---> 32.67%
&C&"-,Bold"&20Tesca Works: Compressor Project Evaluation
&LGJS File: &F&RCreated: 4/19/2010 Revised: &D

Sensitivity CM004 & TS-L12

CM004 Sensitivity
NPV variables
Deviation from base Sales Price Compressor cost
-15% $30,865.20 44,606
-10% $32,680.80 41,841
-5% $34,496.40 39,077
0% 36,312 36,312
5% $38,127.60 33,547
10% $39,943.20 30,782
15% $41,758.80 28,018
Deviation from base Sale price of refrigerator Cost of the compressor
-15% $1,289.45 $238.00
-10% $1,365.30 $252.00
-5% $1,441.15 $266.00
0% $1,517.00 $280.00
5% $1,592.85 $294.00
10% $1,668.70 $308.00
15% $1,744.55 $322.00
TS-L12 Sensitivity
NPV variables
Deviation from base Sales Price Compressor cost
-15% $30,083.20 43,093
-10% $31,852.80 40,526
-5% $33,622.40 37,959
0% $35,392.00 35,392
5% $37,161.60 32,824
10% $38,931.20 30,257
15% $40,700.80 27,690
Deviation from base Sale rice of refrigerator Cost of the compressor
-15% $1,289.45 $238.00
-10% $1,365.30 $252.00
-5% $1,441.15 $266.00
0% $1,517.00 $260.00
5% $1,592.85 $294.00
10% $1,668.70 $308.00
15% $1,744.55 $322.00

Weak CM004

Compressor MC 004 Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
OPERATING SUMMARY
Inflation Factor 3.50%
Price per refrigerator 1,375 1,423 1,473 1,524 1,578 1,633 1,690 1,749 1,811 1,874 1,940 2,007 2,078 2,150 2,226 2,304 2,384 2,468 2,554 2,643
Units sold 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000
Revenue ($000) 55,000 56,925 58,917 60,979 63,114 65,323 67,609 69,975 72,424 74,959 77,583 80,298 83,109 86,018 89,028 92,144 95,369 98,707 102,162 105,738
Expenses ($000)
Labor @ $250/unit (10,000) (10,350) (10,712) (11,087) (11,475) (11,877) (12,293) (12,723) (13,168) (13,629) (14,106) (14,600) (15,111) (15,640) (16,187) (16,753) (17,340) (17,947) (18,575) (19,225)
Parts @ $300/unit (12,000) (12,420) (12,855) (13,305) (13,770) (14,252) (14,751) (15,267) (15,802) (16,355) (16,927) (17,520) (18,133) (18,767) (19,424) (20,104) (20,808) (21,536) (22,290) (23,070)
Compressor (MC - 004) @ $280/unit (11,200) (11,592) (11,998) (12,418) (12,852) (13,302) (13,768) (14,250) (14,748) (15,264) (15,799) (16,352) (16,924) (17,516) (18,129) (18,764) (19,421) (20,100) (20,804) (21,532)
Gross Profit ($000) 21,800 22,563 23,353 24,170 25,016 25,892 26,798 27,736 28,706 29,711 30,751 31,827 32,941 34,094 35,288 36,523 37,801 39,124 40,493 41,911
Training
Sales/Administration (500) (518) (536) (554) (574) (594) (615) (636) (658) (681) (705) (730) (756) (782) (809) (838) (867) (897) (929) (961)
Warranty (Refrigerator & Compressor) per unit: (16,816) (17,405) (18,014) (18,645) (19,297) (19,973) (20,672) (21,395) (22,144) (22,919) (23,721) (24,551) (25,411) (26,300) (27,221) (28,173) (29,159) (30,180) (31,236) (32,330)
Depreciation (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (11,000)
EBIT ($000) 3,934 4,091 4,253 4,421 4,595 4,775 4,961 5,154 5,354 5,561 5,775 5,996 6,225 6,462 6,708 6,962 7,224 7,497 7,778 8,070
Taxes @ 40% (1,573) (1,636) (1,701) (1,768) (1,838) (1,910) (1,985) (2,062) (2,142) (2,224) (2,310) (2,398) (2,490) (2,585) (2,683) (2,785) (2,890) (2,999) (3,111) (3,228)
NOPAT ($000) 2,360 2,454 2,552 2,653 2,757 2,865 2,977 3,093 3,212 3,336 3,465 3,598 3,735 3,877 4,025 4,177 4,335 4,498 4,667 4,842
Operating Cash Flow ($000) - 0 2,910 3,004 3,102 3,203 3,307 3,415 3,527 3,643 3,762 3,886 4,015 4,148 4,285 4,427 4,575 4,727 4,885 5,048 5,217 5,392
INVESTMENT SUMMARY
Plant and Equipment (3,000) (5,000) (3,000) (11,000)
Working Capital @ 12% of Revenue (6,600) 6,600
SALVAGE SUMMARY
Plant & Equipment
Gross Salvage Value - 0
Less: Taxes @ 40% - 0
Net Salvage Value ($000) - 0
Incremental Cash Flow ($000) ---> (3,000) (5,000) (9,600) 2,910 3,004 3,102 3,203 3,307 3,415 3,527 3,643 3,762 3,886 4,015 4,148 4,285 4,427 4,575 4,727 4,885 5,048 5,217 11,992
Net Present Value ($000) @ 11.44% ---> $ 7,833
Internal Rate of Return ---> 17.14%
&C&"-,Bold"&20Tesca Works: Compressor Project Evaluation
&LGJS File: &F&RCreated: 4/19/2010 Revised: &D

Weak TS - L12

Compressor TS - L12 Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
OPERATING SUMMARY
Inflation Factor 3.50%
Price per refrigerator 1,375 1,423 1,473 1,524 1,578 1,633 1,690 1,749 1,811 1,874 1,940 2,007 2,078 2,150 2,226 2,304 2,384 2,468 2,554 2,643
Units sold 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000
Revenue ($000) 55,000 56,925 58,917 60,979 63,114 65,323 67,609 69,975 72,424 74,959 77,583 80,298 83,109 86,018 89,028 92,144 95,369 98,707 102,162 105,738
Expenses ($000)
Labor @ $250/unit (10,000) (10,350) (10,712) (11,087) (11,475) (11,877) (12,293) (12,723) (13,168) (13,629) (14,106) (14,600) (15,111) (15,640) (16,187) (16,753) (17,340) (17,947) (18,575) (19,225)
Parts @ $300/unit (12,000) (12,420) (12,855) (13,305) (13,770) (14,252) (14,751) (15,267) (15,802) (16,355) (16,927) (17,520) (18,133) (18,767) (19,424) (20,104) (20,808) (21,536) (22,290) (23,070)
Compressor (TS - L12) @ $260/unit (10,400) (10,764) (11,141) (11,531) (11,934) (12,352) (12,784) (13,232) (13,695) (14,174) (14,670) (15,184) (15,715) (16,265) (16,834) (17,424) (18,033) (18,665) (19,318) (19,994)
Gross Profit ($000) 22,600 23,391 24,210 25,057 25,934 26,842 27,781 28,754 29,760 30,801 31,880 32,995 34,150 35,345 36,582 37,863 39,188 40,560 41,979 43,449
Training
Sales/Administration - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0
Warranty (Refrigerator & Compressor) per unit: (18,279) (18,918) (19,581) (20,266) (20,975) (21,709) (22,469) (23,256) (24,070) (24,912) (25,784) (26,686) (27,620) (28,587) (29,588) (30,623) (31,695) (32,804) (33,953) (35,141)
Depreciation (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (11,000)
EBIT ($000) 3,771 3,923 4,079 4,241 4,409 4,582 4,762 4,948 5,140 5,339 5,546 5,759 5,980 6,208 6,445 6,690 6,943 7,205 7,477 7,758
Taxes @ 40% (1,509) (1,569) (1,632) (1,696) (1,764) (1,833) (1,905) (1,979) (2,056) (2,136) (2,218) (2,304) (2,392) (2,483) (2,578) (2,676) (2,777) (2,882) (2,991) (3,103)
NOPAT ($000) 2,263 2,354 2,447 2,545 2,645 2,749 2,857 2,969 3,084 3,204 3,327 3,455 3,588 3,725 3,867 4,014 4,166 4,323 4,486 4,655
Operating Cash Flow ($000) 2,813 2,904 2,997 3,095 3,195 3,299 3,407 3,519 3,634 3,754 3,877 4,005 4,138 4,275 4,417 4,564 4,716 4,873 5,036 5,205
INVESTMENT SUMMARY
Plant and Equipment (3,000) (5,000) (3,000) (11,000)
Working Capital @ 12% of Revenue (6,600) 6,600
SALVAGE SUMMARY
Plant & Equipment
Gross Salvage Value - 0
Less: Taxes @ 40% - 0
Net Salvage Value ($000) - 0
Incremental Cash Flow ($000) ---> (3,000) (5,000) (9,600) 2,813 2,904 2,997 3,095 3,195 3,299 3,407 3,519 3,634 3,754 3,877 4,005 4,138 4,275 4,417 4,564 4,716 4,873 5,036 11,805
Net Present Value ($000) @ 11.44% ---> $ 7,070
Internal Rate of Return ---> 16.62%
&C&"-,Bold"&20Tesca Works: Compressor Project Evaluation
&LGJS File: &F&RCreated: 4/19/2010 Revised: &D

Average CM004

COMPRESSOR MC - 004 Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
OPERATING SUMMARY
Inflation Factor 3.50%
Price per refrigerator 1,575 1,630 1,687 1,746 1,807 1,871 1,936 2,004 2,074 2,147 2,222 2,299 2,380 2,463 2,549 2,639 2,731 2,827 2,926 3,028
Units sold 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500
Revenue ($000) 66,938 69,280 71,705 74,215 76,812 79,501 82,283 85,163 88,144 91,229 94,422 97,727 101,147 104,687 108,351 112,144 116,069 120,131 124,336 128,687
Expenses ($000)
Labor @ $250/unit (10,625) (10,997) (11,382) (11,780) (12,192) (12,619) (13,061) (13,518) (13,991) (14,481) (14,988) (15,512) (16,055) (16,617) (17,199) (17,801) (18,424) (19,068) (19,736) (20,427)
Parts @ $300/unit (12,750) (13,196) (13,658) (14,136) (14,631) (15,143) (15,673) (16,222) (16,789) (17,377) (17,985) (18,615) (19,266) (19,940) (20,638) (21,361) (22,108) (22,882) (23,683) (24,512)
Compressor (MC - 004) @ $280/unit (11,900) (12,317) (12,748) (13,194) (13,656) (14,133) (14,628) (15,140) (15,670) (16,218) (16,786) (17,374) (17,982) (18,611) (19,262) (19,937) (20,634) (21,357) (22,104) (22,878)
Gross Profit ($000) 31,663 32,771 33,918 35,105 36,333 37,605 38,921 40,284 41,693 43,153 44,663 46,226 47,844 49,519 51,252 53,046 54,902 56,824 58,813 60,871
Training
Sales/Administration (500) (518) (536) (554) (574) (594) (615) (636) (658) (681) (705) (730) (756) (782) (809) (838) (867) (897) (929) (961)
Warranty (Refrigerator & Compressor) per unit: (17,867) (18,493) (19,140) (19,810) (20,503) (21,221) (21,964) (22,732) (23,528) (24,351) (25,204) (26,086) (26,999) (27,944) (28,922) (29,934) (30,982) (32,066) (33,189) (34,350)
Depreciation (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (11,000)
EBIT ($000) 12,745 13,210 13,692 14,190 14,706 15,240 15,793 16,365 16,957 17,570 18,204 18,860 19,540 20,243 20,971 21,724 22,503 23,310 24,145 25,010
Taxes @ 40% (5,098) (5,284) (5,477) (5,676) (5,883) (6,096) (6,317) (6,546) (6,783) (7,028) (7,282) (7,544) (7,816) (8,097) (8,388) (8,690) (9,001) (9,324) (9,658) (10,004)
NOPAT ($000) 7,647 7,926 8,215 8,514 8,824 9,144 9,476 9,819 10,174 10,542 10,922 11,316 11,724 12,146 12,582 13,034 13,502 13,986 14,487 15,006
Operating Cash Flow ($000) - 0 8,197 8,476 8,765 9,064 9,374 9,694 10,026 10,369 10,724 11,092 11,472 11,866 12,274 12,696 13,132 13,584 14,052 14,536 15,037 15,556
INVESTMENT SUMMARY
Plant and Equipment (3,000) (5,000) (3,000) (11,000)
Working Capital @ 12% of Revenue (8,033) 8,033
SALVAGE SUMMARY
Plant & Equipment
Gross Salvage Value - 0
Less: Taxes @ 40% - 0
Net Salvage Value ($000) - 0
Incremental Cash Flow ($000) ---> (3,000) (5,000) (11,033) 8,197 8,476 8,765 9,064 9,374 9,694 10,026 10,369 10,724 11,092 11,472 11,866 12,274 12,696 13,132 13,584 14,052 14,536 15,037 23,588
Net Present Value ($000) @ 11.44% ---> $ 48,218
Internal Rate of Return ---> 37.99%
&C&"-,Bold"&20Tesca Works: Compressor Project Evaluation
&LGJS File: &F&RCreated: 4/19/2010 Revised: &D

Average TS - L12

COMPRESSOR TS - L12 Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
OPERATING SUMMARY
Inflation Factor 3.50%
Price per refrigerator 1,575 1,630 1,687 1,746 1,807 1,871 1,936 2,004 2,074 2,147 2,222 2,299 2,380 2,463 2,549 2,639 2,731 2,827 2,926 3,028
Units sold 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500 42,500
Revenue ($000) 66,938 69,280 71,705 74,215 76,812 79,501 82,283 85,163 88,144 91,229 94,422 97,727 101,147 104,687 108,351 112,144 116,069 120,131 124,336 128,687
Expenses ($000)
Labor @ $250/unit (10,625) (10,997) (11,382) (11,780) (12,192) (12,619) (13,061) (13,518) (13,991) (14,481) (14,988) (15,512) (16,055) (16,617) (17,199) (17,801) (18,424) (19,068) (19,736) (20,427)
Parts @ $300/unit (12,750) (13,196) (13,658) (14,136) (14,631) (15,143) (15,673) (16,222) (16,789) (17,377) (17,985) (18,615) (19,266) (19,940) (20,638) (21,361) (22,108) (22,882) (23,683) (24,512)
Compressor (TS - L12) @ $260/unit (11,050) (11,437) (11,837) (12,251) (12,680) (13,124) (13,583) (14,059) (14,551) (15,060) (15,587) (16,133) (16,697) (17,282) (17,887) (18,513) (19,161) (19,831) (20,525) (21,244)
Gross Profit ($000) 32,513 33,650 34,828 36,047 37,309 38,615 39,966 41,365 42,813 44,311 45,862 47,467 49,129 50,848 52,628 54,470 56,376 58,349 60,392 62,505
Training
Sales/Administration - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0
Warranty (Refrigerator & Compressor) per unit: (19,421) (20,101) (20,804) (21,533) (22,286) (23,066) (23,874) (24,709) (25,574) (26,469) (27,395) (28,354) (29,347) (30,374) (31,437) (32,537) (33,676) (34,855) (36,075) (37,337)
Depreciation (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (11,000)
EBIT ($000) 12,541 13,000 13,474 13,965 14,473 14,998 15,543 16,106 16,689 17,292 17,917 18,563 19,232 19,924 20,641 21,383 22,150 22,945 23,767 24,618
Taxes @ 40% (5,017) (5,200) (5,390) (5,586) (5,789) (5,999) (6,217) (6,442) (6,676) (6,917) (7,167) (7,425) (7,693) (7,970) (8,256) (8,553) (8,860) (9,178) (9,507) (9,847)
NOPAT ($000) 7,525 7,800 8,084 8,379 8,684 8,999 9,326 9,664 10,013 10,375 10,750 11,138 11,539 11,955 12,385 12,830 13,290 13,767 14,260 14,771
Operating Cash Flow ($000) 8,075 8,350 8,634 8,929 9,234 9,549 9,876 10,214 10,563 10,925 11,300 11,688 12,089 12,505 12,935 13,380 13,840 14,317 14,810 15,321
INVESTMENT SUMMARY
Plant and Equipment (3,000) (5,000) (3,000) (11,000)
Working Capital @ 12% of Revenue (8,033) 8,033
SALVAGE SUMMARY
Plant & Equipment
Gross Salvage Value - 0
Less: Taxes @ 40% - 0
Net Salvage Value ($000) - 0
Incremental Cash Flow ($000) ---> (3,000) (5,000) (11,033) 8,075 8,350 8,634 8,929 9,234 9,549 9,876 10,214 10,563 10,925 11,300 11,688 12,089 12,505 12,935 13,380 13,840 14,317 14,810 23,353
Net Present Value ($000) @ 11.44% ---> $ 47,261
Internal Rate of Return ---> 37.55%
&C&"-,Bold"&20Tesca Works: Compressor Project Evaluation
&LGJS File: &F&RCreated: 4/19/2010 Revised: &D

Strong CM004

COMPRESSOR MC - 004 Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
OPERATING SUMMARY
Inflation Factor 3.50%
Price per refrigerator 1,600 1,656 1,714 1,774 1,836 1,900 1,967 2,036 2,107 2,181 2,257 2,336 2,418 2,502 2,590 2,681 2,774 2,871 2,972 3,076
Units sold 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000
Revenue ($000) 68,800 71,208 73,700 76,280 78,950 81,713 84,573 87,533 90,596 93,767 97,049 100,446 103,962 107,600 111,366 115,264 119,298 123,474 127,795 132,268
Expenses ($000)
Labor @ $250/unit (10,750) (11,126) (11,516) (11,919) (12,336) (12,768) (13,214) (13,677) (14,156) (14,651) (15,164) (15,695) (16,244) (16,813) (17,401) (18,010) (18,640) (19,293) (19,968) (20,667)
Parts @ $300/unit (12,900) (13,351) (13,819) (14,302) (14,803) (15,321) (15,857) (16,412) (16,987) (17,581) (18,197) (18,834) (19,493) (20,175) (20,881) (21,612) (22,368) (23,151) (23,962) (24,800)
Compressor (MC - 004) @ $280/unit (12,040) (12,461) (12,898) (13,349) (13,816) (14,300) (14,800) (15,318) (15,854) (16,409) (16,984) (17,578) (18,193) (18,830) (19,489) (20,171) (20,877) (21,608) (22,364) (23,147)
Gross Profit ($000) 33,110 34,269 35,468 36,710 37,994 39,324 40,701 42,125 43,600 45,126 46,705 48,340 50,031 51,783 53,595 55,471 57,412 59,422 61,501 63,654
Training
Sales/Administration (500) (518) (536) (554) (574) (594) (615) (636) (658) (681) (705) (730) (756) (782) (809) (838) (867) (897) (929) (961)
Warranty (Refrigerator & Compressor) per unit: (18,078) (18,710) (19,365) (20,043) (20,745) (21,471) (22,222) (23,000) (23,805) (24,638) (25,500) (26,393) (27,317) (28,273) (29,262) (30,286) (31,346) (32,444) (33,579) (34,754)
Depreciation (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (11,000)
EBIT ($000) 13,982 14,491 15,017 15,562 16,126 16,710 17,314 17,939 18,586 19,256 19,949 20,667 21,409 22,178 22,973 23,797 24,649 25,531 26,444 27,388
Taxes @ 40% (5,593) (5,796) (6,007) (6,225) (6,450) (6,684) (6,926) (7,176) (7,435) (7,702) (7,980) (8,267) (8,564) (8,871) (9,189) (9,519) (9,860) (10,212) (10,577) (10,955)
NOPAT ($000) 8,389 8,695 9,010 9,337 9,676 10,026 10,388 10,764 11,152 11,554 11,970 12,400 12,846 13,307 13,784 14,278 14,789 15,319 15,866 16,433
Operating Cash Flow ($000) - 0 8,939 9,245 9,560 9,887 10,226 10,576 10,938 11,314 11,702 12,104 12,520 12,950 13,396 13,857 14,334 14,828 15,339 15,869 16,416 16,983
INVESTMENT SUMMARY
Plant and Equipment (3,000) (5,000) (3,000) (11,000)
Working Capital @ 12% of Revenue (8,256) 8,256
SALVAGE SUMMARY
Plant & Equipment
Gross Salvage Value - 0
Less: Taxes @ 40% - 0
Net Salvage Value ($000) - 0
Incremental Cash Flow ($000) ---> (3,000) (5,000) (11,256) 8,939 9,245 9,560 9,887 10,226 10,576 10,938 11,314 11,702 12,104 12,520 12,950 13,396 13,857 14,334 14,828 15,339 15,869 16,416 25,239
Net Present Value ($000) @ 11.44% ---> $ 53,873
Internal Rate of Return ---> 40.32%
&C&"-,Bold"&20Tesca Works: Compressor Project Evaluation
&LGJS File: &F&RCreated: 4/19/2010 Revised: &D

Strong TS - L12

COMPRESSOR TS - L12 Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
OPERATING SUMMARY
Inflation Factor 3.50%
Price per refrigerator 1,600 1,656 1,714 1,774 1,836 1,900 1,967 2,036 2,107 2,181 2,257 2,336 2,418 2,502 2,590 2,681 2,774 2,871 2,972 3,076
Units sold 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000
Revenue ($000) 68,800 71,208 73,700 76,280 78,950 81,713 84,573 87,533 90,596 93,767 97,049 100,446 103,962 107,600 111,366 115,264 119,298 123,474 127,795 132,268
Expenses ($000)
Labor @ $250/unit (10,750) (11,126) (11,516) (11,919) (12,336) (12,768) (13,214) (13,677) (14,156) (14,651) (15,164) (15,695) (16,244) (16,813) (17,401) (18,010) (18,640) (19,293) (19,968) (20,667)
Parts @ $300/unit (12,900) (13,351) (13,819) (14,302) (14,803) (15,321) (15,857) (16,412) (16,987) (17,581) (18,197) (18,834) (19,493) (20,175) (20,881) (21,612) (22,368) (23,151) (23,962) (24,800)
Compressor (TS - L12) @ $260/unit (11,180) (11,571) (11,976) (12,395) (12,829) (13,278) (13,743) (14,224) (14,722) (15,237) (15,770) (16,322) (16,894) (17,485) (18,097) (18,730) (19,386) (20,064) (20,767) (21,494)
Gross Profit ($000) 33,970 35,159 36,390 37,663 38,981 40,346 41,758 43,219 44,732 46,298 47,918 49,595 51,331 53,128 54,987 56,912 58,904 60,965 63,099 65,307
Training
Sales/Administration - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0
Warranty (Refrigerator & Compressor) per unit: (19,650) (20,337) (21,049) (21,786) (22,548) (23,338) (24,154) (25,000) (25,875) (26,780) (27,718) (28,688) (29,692) (30,731) (31,807) (32,920) (34,072) (35,265) (36,499) (37,776)
Depreciation (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (550) (11,000)
EBIT ($000) 13,770 14,272 14,790 15,327 15,883 16,458 17,053 17,670 18,307 18,967 19,650 20,357 21,089 21,846 22,630 23,442 24,281 25,150 26,050 26,981
Taxes @ 40% (5,508) (5,709) (5,916) (6,131) (6,353) (6,583) (6,821) (7,068) (7,323) (7,587) (7,860) (8,143) (8,436) (8,739) (9,052) (9,377) (9,713) (10,060) (10,420) (10,792)
NOPAT ($000) 8,262 8,563 8,874 9,196 9,530 9,875 10,232 10,602 10,984 11,380 11,790 12,214 12,653 13,108 13,578 14,065 14,569 15,090 15,630 16,189
Operating Cash Flow ($000) 8,812 9,113 9,424 9,746 10,080 10,425 10,782 11,152 11,534 11,930 12,340 12,764 13,203 13,658 14,128 14,615 15,119 15,640 16,180 16,739
INVESTMENT SUMMARY
Plant and Equipment (3,000) (5,000) (3,000) (11,000)
Working Capital @ 12% of Revenue (8,256) 8,256
SALVAGE SUMMARY
Plant & Equipment
Gross Salvage Value - 0
Less: Taxes @ 40% - 0
Net Salvage Value ($000) - 0
Incremental Cash Flow ($000) ---> (3,000) (5,000) (11,256) 8,812 9,113 9,424 9,746 10,080 10,425 10,782 11,152 11,534 11,930 12,340 12,764 13,203 13,658 14,128 14,615 15,119 15,640 16,180 24,995
Net Present Value ($000) @ 11.44% ---> $ 52,877
Internal Rate of Return ---> 39.88%
&C&"-,Bold"&20Tesca Works: Compressor Project Evaluation
&LGJS File: &F&RCreated: 4/19/2010 Revised: &D

Cost of Capital

Current cost (YTM) of company bonds: 6.50%
Tax Rate: 40%
10 Year T-Notes YTM: 6.00%
S&P Market Risk Premium (MRP): 6.50%
Company beta: 1.3
Tesca D/E: 0.40
Calculations:
R-dat = R-d x (1 - Tax Rate): 3.90%
D/V = (D/E)/(1+D/E) : 0.2857
R-eq = R-rf + Beta x (MRP): 14.45%
E/V = 1 - D/V: 0.7143
WACC = R-dat x D/V + R-eq x E/V : 11.44%
&C&"-,Bold"&22WACC Calculations

Warranty Costs

Warranty Cost
Per Refrigerator + Compressor
COST OF NO. OF PRESENT
PMT CAPITAL YEARS VALUE
Refrigerator + Compressor MC - 004 115.00 11.44% 5 $420.41
Refrigerator + Compressor TS - L12 125.00 11.44% 5 $456.97
&C&"-,Bold"&22Warranty Calculations
&LGJS File: &F&RCreated: 4/19/2010 Revised: &D

Scenario Analysis

Situation Analysis
25% 45% 30% 100%
Weak Avg. Strong
MC-004 15.00% 25.00% 30.00%
3.75% 11.25% 9.00% 24.00%
TS-12 13% 26.00% 28.00%
3.25% 11.70% 8.40% 23.35%