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Estimating Equity Free Cash Flow All Equity Financed Project (Unlevered)

This document summarizes the financial projections for an equity-financed manufacturing project over a 5-year period. It includes pro forma income statements, balance sheets, and calculations of equity free cash flow. Key details are an initial $100,000 capital expenditure, 2% annual price increases, and 10% annual increases in production costs. The NPV of equity free cash flows is calculated to be $5,473 using a 15% discount rate.

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Somlina Mukherjee
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98 views5 pages

Estimating Equity Free Cash Flow All Equity Financed Project (Unlevered)

This document summarizes the financial projections for an equity-financed manufacturing project over a 5-year period. It includes pro forma income statements, balance sheets, and calculations of equity free cash flow. Key details are an initial $100,000 capital expenditure, 2% annual price increases, and 10% annual increases in production costs. The NPV of equity free cash flows is calculated to be $5,473 using a 15% discount rate.

Uploaded by

Somlina Mukherjee
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd
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Estimating Equity Free Cash Flow All equity financed Project(Unlevered)

Price of balls in first year 20 dollars


Price increase rate 2%
Production cost per unit at t= 1 10 dollars
Increase in production cost 10% per year
Working capital investment (year 0 ) 10000
CAPEX (year 0) 100000
Tax 34%
Net Working Capital (GIVEN) 10% of sales revenue

Proforma Income statement 1 2 3 4 5

Sales 100000 163200 249696 212241.6 129891.9


Cost of goods sold including operating expenses 50000 88000 145200 133100 87846
Gross Profit 50000 75200 104496 79141.6 42045.86
Operating expense(before depreciation)
EBITDA 50000 75200 104496 79141.6 42045.86
Depreciation expense 20000 32000 19200 11500 11500
EBIT 30000 43200 85296 67641.6 30545.86
Interest expense 0 0 0 0 0
Profit before tax 30000 43200 85296 67641.6 30545.86
Tax 10200 14688 29000.64 22998.14 10385.59
Net Income 19800 28512 56295.36 44643.46 20160.27

Proforma Balance sheet 0 1 2 3 4 5

Net Working Capital 10000 10000 16320 24969.6 21224.16 0


Gross Plant and Equipment 100000 100000 100000 100000 100000 100000
Less Accumulated depreciation 0 20000 52000 71200 82700 94200
Net Plant and Equipment 100000 80000 48000 28800 17300 5800
Total Assets 110000 90000 64320 53769.6 38524.16 5800
Interest bearing Debt 0 0 0 0 0 0
Equity 110000 90000 64320 53769.6 38524.16 5800
Total Liabilities and equity 110000 90000 64320 53769.6 38524.16 5800

Equity Free Cash Flow 0 1 2 3 4 5


Net Income 19800 28512 56295.36 44643.46 20160.27
Plus Depreciation and Amortization 20000 32000 19200 11500 11500
Less Capital Expenditure 100000 0 0 0 0 -21772
Less change in Working Capital 10000 0 6320 8649.6 -3745.44 -21224.16
Less principal payments on debt 0 0 0 0 0
Plus Proceeds from new debt issues 0 0 0 0 0
Opportunity cost (after tax values) 150000 -150000
Equity Free Cash Flow -260000 39800 54192 66845.76 59888.9 224656.4

NPV (@ 15%) ₹ 5,473.43


Year Quantity produced Price Production cost per unit Cost of goods sold
1 5000 20 10 50000
2 8000 20.4 11 88000
3 12000 20.808 12.1 145200
4 10000 21.22416 13.31 133100
5 6000 21.64864 14.641 87846

MACRS Table

Year 3-year 5-year 7-year


1 0.333 0.2 0.143
2 0.445 0.32 0.245
3 0.148 0.192 0.175
4 0.074 0.115 0.125
5 0.115 0.089
6 0.058 0.089
7 0.089
8 0.045
9
10
11

salvage value 21772


10-year
0.1
0.18
0.144
0.115
0.092
0.074
0.066
0.066
0.065
0.065
0.033

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