Вы находитесь на странице: 1из 13

Stryker PCB

In-sourcing Analysis
Angela Marie K 225246
Sharwin Navaratnam 234514
Devi Tri K 228744
Rafidha Amira M 225008
Option #3 Calculation
Option #3
Manufacture own PCB by building new
plant/facility
Require large capital
Start-up expenses are listed on next slide
If go on with this project, transition from
outsource to insource will take place (buy +
produce in-house), and completely finish by
end of 2005
Offer better A/P payment terms (120 days
instead of 30 days)
Site prep. & construction 3,030,000
Furnishing & non-manuf. equip 126,000
Comm & IT infrastructure 210,000
Equipment 2,643,258

6,009,258

We exclude Architecture & Engineering because at the


footnote it is categorized as expense
2003 2004 2005 2006 2007 2008 2009

Archi & eng


exp 278,000
PCB
transition
10,237,918 3,799,665
purchases

Manuf. cost
1,712,087 7,847,541 9,553,863 10,498,507 11,706,178 13,650,762

Depreciation
50,500 590,608 590,608 590,608 478,608 478,608 478,608

Total
expenses 328,500 12,540,613 12,237,814 10,144,471 10,977,115 12,184,786 14,129,370

Tax (36%) 118,260 4,514,620 4,405,613 3,652,009 3,951,761 4,386,523 5,086,573

After Tax
(36%) 210,240 8,025,993 7,832,201 6,492,462 7,025,354 7,798,263 9,042,797

Depreciation
(add back) 50,500 590,608 590,608 590,608 478,608 478,608 478,608

Change in A.
Payable - - 9,952 281,952 232,137 204,827 345,475

CASH FLOW (159,740) (7,435,384) (7,231,641) (5,619,901) (6,314,608) (7,114,828) (8,218,714)


CF for NPV Calculation
NPV = (IO) + CF
2003 2004 2005 2006 2007 2008 2009

(159,740) (7,435,384) (7,231,641) (5,619,901) (6,314,608) (7,114,828) (8,218,714)

(6,009,258) 835,292

(7,383,421)
(6,168,998)
CF without the project
2003 2004 2005 2006 2007 2008 2009

PCB purchase
10,237,918 10,237,918 11,773,605 14,363,798 16,518,368 20,152,409

Tax (36%)
3,685,650 3,685,650 4,238,498 5,170,967 5,946,612 7,254,867

After tax PCB


purchase 6,552,268 6,552,268 7,535,107 9,192,831 10,571,756 12,897,542

A. Payable
Change - - 126,221 212,892 177,088 298,688

Less:
Salvage
value A. 1,656,362
Payable

Cash flows (6,552,268) (6,552,268) (7,408,886) (8,979,939) (10,394,668) (14,255,216)


Incremental CF
Incremental CF = CF with project CF without project
So, subtract each years CF
Excl. sunk cost; incl. opportunity cost (value of land, but
not mentioned)

2003 : (6,168,998)
2004 : (883,117)
2005: (679,373)
2006: 1,788,985
2007: 2,665,330
2008: 3,279,840
2009: 6,871,794
NPV
Using 15% discount rate
883,117
(6,168,998)+ 1.15 + + +
NPV = $148,905
IRR
Is interest rate that makes NPV equal to
zero.
Rate NPV
14 % 480,127
IRR 0
16 % (113,813)

IRR = 14% +

IRR = 15.627%
Payback period
Year Cash inflow Cummulative cash
in.
0 (2003) (6,168,998)
1 (510,567) (6,679,565)
2 (679,373) (7,358,938)
3 1,788,985 (5,569,953)
4 2,665,330 (2,904,623)
5 3,279,840 375,216
6 6,871,794 7,247,011
We can payback at year 6, so we stop at year 5

= 6 + 0.843 = 6.843 years


Which option is best?
Option #3
Even though start-up costs are high, it
guarantees control of quality and delivery
consistency
Not threatened by weak financial of current
suppliers (as in Option #1)
Not threatened by bargaining power of
supplier (as in Option #2)
Can utilize just-in-time supply method
Better credit terms

Вам также может понравиться