오성엽, 안재형, 유환철. For new PDS Prototype750,000USD Market study200,000USD Price($/ea)360 VC($/ea)155 FC4.7M/year Equipment21.5M Taxes0.35 Year MACRS percentag.

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오성엽, 안재형, 유환철

For new PDS Prototype750,000USD Market study200,000USD Price($/ea)360 VC($/ea)155 FC4.7M/year Equipment21.5M Taxes0.35 Year MACRS percentag e DepreciationEnding book value x$ x$ x$ x$ x$

Year Sales(EA) Sales volume($) Variable costs Fixed costs Opportunity cost Depreciation EBIT Taxes(35%) Net income

Year EBIT Depreciation Taxes OCF Year OCF NWC(-), 20% of sales Initial NWC Change in NWC(-) "A" Capital spending(-) "B" Total cash flow "A"NWC recovery "B"Salvage value= *( )

1. What is the payback period of the project? = 2.71years 2. What is the profitability index of the project? PI= NPV of puture cash flows divided by the initial investment =(I+NPV)/I= ( )/ = What is the NPV of the project? With this cash flows, the NPV at 12percent is NVP= / /(1.12)^ /(1.12)^ /(1.12)^ /(1.12)^5 = So, this project appears quite profitable

3. What is the IRR? The definition of IRR is the discount rate when NPV is zero. To draw it out trial and error method used her. From the result, the rate(IRR) is supposed to exist between 30.07% and 30.08% Discount rate Rate(%)NPV