Case 12 - Working Computers Essay

1324 Words Oct 12th, 2010 6 Pages
1) 12/31/2003 12/31/2004 12/31/2005 12/31/2006 12/31/2007 12/31/2008 12/31/2009 180000 150000 189000 246000 264000 264000 264000
Units sold with new investment
Units sold without new investment 180000 150000 102000 57000 48000 48000 48000 Price $495 per unit Annual Revenue forecast with New Investment in Bernoulli
Year 12/31/2003 12/31/2004 12/31/2005 12/31/2006 12/31/2007 12/31/2008 12/31/2009
Revenue 74,250,000 93,555,000 121,770,000 130,680,000 130,680,000 130,680,000 Annual Revenue forecast without New Investment in Bernoulli
Year 12/31/2003 12/31/2004 12/31/2005 12/31/2006 12/31/2007 12/31/2008 12/31/2009
Revenue -
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Discount Rate 14.50%
With Investment in Bernoulli
Cash Flow Before Tax From Operations $11,880,000 $18,711,000 $24,354,000 $26,136,000 $26,136,000 $26,136,000
Depreciation $5,600,000 $9,200,000 $9,200,000 $9,200,000 $9,200,000 $9,200,000
Cash Flow After Tax From Operations $9,744,800 $15,477,260 $19,201,640 $20,377,760 $20,377,760 $20,377,760
Terminal Value $140,536,276
Investment Made $18,000,000
Total Cash Flow After Tax ($18,000,000) $9,744,800 $15,477,260 $19,201,640 $20,377,760 $20,377,760 $160,914,036 Incremental Cash Flow After Tax ($18,000,000) $0 $8,241,516 $14,318,136 $15,964,704 $15,964,704 $126,066,111 Tax Rate 34%
Depreciation $5,600,000
Discount Rate 14.50% Without Investment in Bernoulli
Cash Flow Before Tax From Operations $11,880,000 $8,078,400 $4,514,400 $3,801,600 $3,801,600 $3,801,600
Depreciation $5,600,000 $5,600,000 $5,600,000 $5,600,000 $5,600,000 $5,600,000
Cash Flow After Tax From Operations $9,744,800 $7,235,744 $4,883,504 $4,413,056 $4,413,056 $4,413,056
Terminal Value $30,434,869
Investment Made
Total Cash Flow After Tax $9,744,800 $7,235,744 $4,883,504 $4,413,056 $4,413,056 $34,847,925 NPV of Bernoulli $71,170,589.61
IRR of Bernoulli 60.38%
Profitability Index 4.95

4) We feel that Working Computers should make the contribution of

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