J Smythe Inc.

Mah

Sales (Units)
Sales, Rs.
Variable Costs
Fixed Costs
Depreciation Rate (Purchase t=2)
Depreciation Expense (Purchase t=2)
Lost Contribution of Oak Tables
EBT
Taxes
PAT
OCF

Investments
Inventory of Mahogany Tables
Investment in Inventory
Inventory of Oak Tables (Not required)
Investment in Oak Table Inventory (not required)
Net Inventory Investment
Equipment
Carrying Value of the Equipment
Market Value of Equipment
Cash Flow from Investment Activities

Tax
Discount Rate

20+31 IATCF

NPV

Hence company should not invest in this project and continue with oak tables
 J Smythe Inc. Mahogany Tables

0 1 2 3 4 5
1300 1325 1375 1450 1320
5600 $7,280,000 $7,420,000 $7,700,000 $8,120,000 $7,392,000
$3,276,000 $3,339,000 $3,465,000 $3,654,000 $3,326,400
$1,700,000 $1,700,000 $1,700,000 $1,700,000 $1,700,000
14.30% 24.50% 17.50%
$1,501,500 $2,572,500 $1,837,500
$540,000 $540,000 $540,000 $540,000 $540,000
$1,764,000 $1,841,000 $493,500 -$346,500 -$11,900
40% $705,600 $736,400 $197,400 -$138,600 -$4,760
$1,058,400 $1,104,600 $296,100 -$207,900 -$7,140
$1,058,400 $1,104,600 $1,797,600 $2,364,600 $1,830,360

$728,000 $742,000 $770,000 $812,000 $739,200 0

$728,000 $14,000 $28,000 $42,000 -$72,800 -$739,200
$90,000 $90,000 $90,000 $90,000 $90,000 $0
$90,000 $0 $0 $0 $0 -$90,000
$638,000 $14,000 $28,000 $42,000 -$72,800 -$649,200
### ###
### $8,998,500 $6,426,000 $4,588,500
$6,100,000
-$638,000 -$14,000 ### -$42,000 $72,800 $6,144,600

40%
14%

-$638,000 $1,044,400 -$9,423,400 $1,755,600 $2,437,400 $7,974,960

###

nd continue with oak tables