Ch8 Week 4 Mini Case

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Data Case CH8. Q1. R&D expense for 2012: 1926 mln Revenue for 2012: 13 788 mln Q2. Total costs research facility: 24 mln. depreciation over 3 years Depreciation costs per year: 24/3= 8 mln per year. Q3. Tax rate in 2012 = Income Tax Expense / Income Before Tax = 1127mln/4914 mln = 22,93% Q4. | Year 0 | Year 1 | Year 2 | Year 3 | | | | | | | | R&D expenses | -77 | | | | | | | | | | | Total Revenues | | 110 | 83 | 55 | All in millions | Cost of Goods Sold | | -8 | -8 | -5 | | Gross Profit | | 102 | 75 | 50 | | depreciation | | -8 | -8 | -8 | | Adm/sales/etc | | -3 | -3 | -2 | | EBIT | -77 | 91 | 64 | 40 | | Unl Net income | -59,34 | 70,13 | 49,32 | 30,83 | | Q5.…show more content…
Net working capital | Year 1 | Year 2 | Year 3 | Year 4 | | Inventory | 1,5 | 1,5 | 1,5 | | All in millions | receivables | 16,5 | 12,45 | 8,25 | | | payables | 1,6 | 1,6 | 1 | | | NWC(=Inventory+receivables-payables) | 16,4 | 12,35 | 8,75 | | | Change in NWC | 16,4 | -4,05 | -3,6 | -8,75 | | Q6. FCF = (Revenue – Costs – Depreciation) x (1 – tax rate) + Depreciation – Capital Expenditure – change in working capital. Free cash flows | Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | | Unl Net income | -59,3439 | 70,1337 | 49,3248 | 30,828 | 0 | All in millions | Depreciation | 0 | 8 | 8 | 8 | 0 | | Capital expenditures | 24 | 0 | 0 | 0 | 0 | | Change in NWC | 0 | 16,4 | -4,05 | -3,6 | -8,75 | | Free cash flows | -83,34 | 61,73 | 61,37 | 42,43 | 8,75 | | Q7. | | Year 1 | Year 2 | Year 3 | Year 4 | | NPV per year | -83,34 | 55,12 | 48,93 | 30,20 | 5,56 | All in millions | Total NPV | 56,46 | | | | | | Q8. Rate | NPV(million) | 5% | 74,97 | 10% | 61,35 | 15% | 49,65 | 20% | 39,5 | 25% | 30,63 | 30% | 22,84 | 35% | 15,94 | 40% | 9,81 | 45% | 4,32 | 50% | -0,61 | 55% | -2,89 | 60% | -5,06

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