Super Project

The Super Project

Project Request Detail 1st per.
1. Land RETURN ON NEW FUNDS EMPLOYED - 10YR AVG.
2. Buildings 80
3. Machinery and Equipment 120 A. New funds employed (line 21) 380 380
4. Engineering B. Profit before taxes (line 35) 240
5. Other C. Net profit (line 37) 116
6. Expense Portion (before tax) D. Calculated return 30.49% 63.08%
7. Sub-total 200 PAYBACK YEARS FROM OPERATIONAL DATE
8. Less: Salvage value (old asset) Part year calculation for first period
9. Total project cost 200 Number of full years to payback 6
10. Less:Taxes on Exp. portion Part year calculation for last period 0.83
11. Net project cost 200 Total years to payback 6.83
1st per. 2nd per. 3rd per. 4th per. 5th per. 6th per. 7th per. 8th per. 9th per. 10th per.
Funds Employed Fiscal 68 Fiscal 69 Fiscal 70 Fiscal 71 Fiscal 72 Fiscal 73 Fiscal 74 Fiscal 75 Fiscal 76 Fiscal 77 10-yr avg
12. Net project cost (line 11) 200 200 200 200 200 200 200 200 200 200
13. Deduct depreciation (cum.) 19 37 54 70 85 98 110 121 131 140
14. Capital funds employed 181 163 146 130 115 102 90 79 69 60 114
15. Cash 124 134 142 151 160 160 169 169 178 178 157
16. Receivables
17. Inventories 207 222 237 251 266 266 281 281 296 296 260
18. Prepaid and deferred exp.
19. Less: current liabilities (2) (82) (108) (138) (185) (184) (195) (195) (207) (207) (150)
20. Total working funds (15 thru 19) 329 274 271 264 241 242 255 255 267 267 267
21. Total new funds employed (14+20) 510 437 417 394 356 344 345 334 336 327 380
Profit and Loss
22. Unit volume 1,100 1,200 1,300 1,400 1,500 1,500 1,600 1,600 1,700 1,700 1,460
23. Gross Sales 2,200 2,400 2,600 2,800 3,000 3,000 3,200 3,200 3,400 3,400 2,920
24. Deductions 88 96 104 112 120 120 128 128 136 136 117
25. Net sales 2,112 2,304 2,496 2,688 2,880 2,880 3,072 3,072 3,264 3,264 2,803
26. Cost of goods sold 1,100 1,200 1,300 1,400 1,500 1,500 1,600 1,600 1,700 1,700 1,460
27. Gross Profit 1,012 1,104 1,196 1,288 1,380 1,380 1,472 1,472 1,564 1,564 1,343
28. Advertising expense
29. Selling expense 1,100 1,050 1,000 900 700 700 730 730 750 750 841
30. General and Admin. costs
31. Research expense
32. Start-up costs 15 2
33. Other: Test market 360 36
34. Adjustments: Erosion 180 200 210 220 230 230 240 240 250 250 225
35. Profit before taxes (643) (146) (14) 168 450 450 502 502 564 564 240
36. Taxes (334) (76) (7) 87 234 234 261 261 293 293 125
36A. Add: Investment credit (1) (1) (1) (1) (1) (1) (1) (1) - - (1)
37. Net profit (308) (69) (6) 82 217 217 242 242 271 271 116
Super Project
38. Cumulative net profit (308) (377) (382) (301) (84) 133 375 617 888 1,159
39. New funds to repay (21 less 38) 818 814 799 695 440 211 (30) (283) (552) (832)
Base Case Assumptions: Senstivity
Jell-O erosion factor 50% base case 44
Building and agglom 100% (after 3 years) Jello to 60% (15)
Facilities overhead 100% (after 3 years) Jello to 100% (250)
Additional overhead 75% Facilities to 1971 107
Distribution system alloc 0% Facilities to 1969 (23)
Internal rate of return 10.7% Bldg & Agglom usage allocation 230
NPV @ 10% $44 NPV at 11% 65
Inflation in cost of bldg & agglom. 25%
1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977
Depreciation rates 9.5% 9.0% 8.5% 8.0% 7.5% 6.5% 6.0% 5.5% 5.0% 4.5%
Net sales 2,112 2,304 2,496 2,688 2,880 2,880 3,072 3,072 3,264 3,264
COGS (1,100) (1,200) (1,300) (1,400) (1,500) (1,500) (1,600) (1,600) (1,700) (1,700)
Selling expense (1,100) (1,050) (1,000) (900) (700) (700) (730) (730) (750) (750)
Depreciation (new) (19) (18) (17) (16) (15) (13) (12) (11) (10) (9)
Depreciation (Jell-O) (100) (95) (89) (84) (79) (68) (63)
Depreciation (dist system) - - - - - - - - - -
Start-up costs (15)
Facilities overhead (28) (28) (28) (28) (28) (28) (28)
Additional overhead (68) (68) (68) (68) (68) (68)
Jell-O erosion - (90) (100) (105) (110) (115) (115) (120) (120) (125) (125)
Profit before taxes (15) (197) (64) 74 134 360 367 431 437 515 522
Taxes @ 52% 8 102 33 (38) (70) (187) (191) (224) (227) (268) (271)
Investment tax credit - 8 - - - - - - - - -
Net profit (7) (87) (31) 36 64 173 176 207 210 247 250
Depreciation add-back - 19 18 17 116 110 102 96 90 78 72
Operating cash flow (7) (68) (13) 53 180 282 279 303 299 326 322
New plant & equipment 200
Jell-O building 250
Jell-O equipment 800
Distribution system -
Change in NWC - 329 (55) (3) (7) (23) 1 13 - 12 -
Investment outflow 200 329 (55) 1,047 (7) (23) 1 13 - 12 -
Recovery of working capital 267
Recovery of pl&eq (book) 533
Net cash flow (207) (397) 42 (994) 187 305 278 290 299 314 1,122
NPV $44