Q1

if Now setup costs are considere

Q2

OTIMISTIC SOLUTION

PESSIMISTIC Solution

13.19%

This is the growth rate at which the initial

investment cost of 1000000$ will be recovered
exactly at the end of 5 years
 This is the growth rate at which the initial
investment cost of 1000000$ will be recovered
exactly at the end of 5 years

Q3

Q4

(+)
(-)
(-)

(+)
(-)
(-)

(+)
(-)
(-)

Particulars
objective is to Find Sales
FCFF CGS
Gross Profit
(-)SGA
(-)R & D
EBITDA
(-)D &A
EBIT
(-) Corporate Tax
(EBIT*(1-t)) After Tax EBIT
(+)D & A
(-) Delta Capex
(-)DeltaNWC
FCFF
T0 find Terminal Value
1) Perpetuity Method

If we consider the debt and we only give him a share of equity only
Debt as per 2014 Data

2)EBITDA MULTIPLE

If we consider the debt and we only give him a share of equity only
Debt as per 2014 Data
Total FC 943994 (Comprises of Rent, Utility & Labour c
UV(unit Variable Cost) 40
Unit Sales Price 80

BEP(in units) 23600

BEP(in sales) or Cash BEP 1887988

if Now setup costs are considered(I million $)

Total FC 1143994
UV(unit Variable Cost) 40
Unit Sales Price 80

BEP(in units) 28600

BEP(in sales) 2287988

Particulars Year 1 Year 2

Sales Revenue(assuming 20% growth rate) 1887988 2265585.6
COGS(50% of sales revenue) 943994 1132792.8
Rent 310600 319918
Utility 38644 39803.32
Labor cost 594750 624487.5
1887988 2117001.62
Profit 0 148583.98
Initial Investment 1000000 1000000
Investment Uncovered 1000000 851416.02

Particulars Year 1 Year 2

Sales Revenue(assuming 5% growth rate) 1887988 1982387.4
COGS(50% of sales revenue) 943994 991193.7
Rent 310600 319918
Utility 38644 39803.32
Labor cost 594750 624487.5
1887988 1975402.52
Profit 0 6984.88000000012
Initial Investment 1000000 1000000
Investment Uncovered 1000000 993015.12

Particulars Year 1 Year 2

Sales Revenue(assuming X% growth rate) 1887988 2137029.9913329
COGS(50% of sales revenue) 943994 1068514.99566645
Rent 310600 319918
Utility 38644 39803.32
Labor cost 594750 624487.5
1887988 2052723.81566645
Profit 0 84306.1756664508
Initial Investment 1000000 1000000
Investment Uncovered 1000000 915693.824333549

Decision is to open your shop as seeing growth rate from 2012 to 2013 was 81%
here we require only growth rate of 13.19%
hence opening a new shop is a profitable venture
2012 sales revenue 4132517
2013 sales revenue 7491187
81.27%
Enterprise value
EBIT(1-t)
Depreciation
Delta Capex
Delta NWC
0 This is EV

OR
PAT
Depreciation ( As company doesnot
Delta Capex have a credile history)
Delta NWC
0 This is EV

OR (line by Line Projections)

0 This is EV

2012 2013 2014

4132517 7491187 11000000
1303416 1632722 2397476.12761502
2829101 5858465 8602523.87238498
2449200 4342500 6376492.80414439
0 0 0
379901 1515965 2226031.06824059
41800 149007 24750
338101 1366958 2201281.06824059
4421 74191 770448.373884206
333680 1292767 1430832.69435638
41800 149007 24750
142212 1194393 33000
10800 271200 68000
222468 -23819 1354582.69435638
 28195.9728535758 i.e (Last year FCFF*(1+g))/(WACC -g)

PVS using WACC as

discounting rate

f we consider the debt and we only give him a share of equity only
Loans Payable - short Term 99980
Loans Payable - Long Term 917635
Total Debt 1017615
Hence Only Equity Value -997740.693935644
Chinese Investor is willing to pay 10000000

-1002.264%
% of share or equity we need to give him

12X 12 is the transaction Multiple or trading Multiple

EBITDA in 2014 2226031.06824059

EV 26712372.818887

f we consider the debt and we only give him a share of equity only
Loans Payable - short Term 99980
Loans Payable - Long Term 917635
Total Debt 1017615
Hence Only Equity Value 25694757.818887
Chinese Investor is willing to pay 10000000
% of share or equity we need to give him 38.918%
f Rent, Utility & Labour costs)
Unit Contribution Margin 40

Fixed cost/CMP 1887988 BEP(in sales) or Cash BEP

CMP :- Contribution Margin Percentage 50%

Assuming St. Line depreciation for 5 years

Depreciation for each year 200000

(Considering Life of 5 Years)

Year 3 Year 4 Year 5

2718702.72 3262443.264 3914931.9168
1359351.36 1631221.632 1957465.9584
329515.54 339401.0062 349583.036386
40997.4196 42227.342188 43494.16245364
655711.875 688497.46875 722922.3421875
2385576.1946 2701347.449138 3073465.499427
333126.5254 561095.814862 841466.4173729
851416.02 518289.4946 -42806.320262
518289.4946 -42806.320262 -884272.7376349

Year 3 Year 4 Year 5

2081506.77 2185582.1085 2294861.213925
1040753.385 1092791.05425 1147430.606963
329515.54 339401.0062 349583.036386
40997.4196 42227.342188 43494.16245364
655711.875 688497.46875 722922.3421875
2066978.2196 2162916.871388 2263430.14799
14528.5504000001 22665.237112 31431.06593536
993015.12 978486.5696 955821.332488
978486.5696 955821.332488 924390.2665526

Year 3 Year 4 Year 5

2418922.78121275 2737999.674876 3099165.578102
1209461.39060638 1368999.837438 1549582.789051
329515.54 339401.0062 349583.036386
 40997.4196 42227.342188 43494.16245364
655711.875 688497.46875 722922.3421875
2235686.22520638 2439125.654576 2665582.330078
183236.556006376 298874.0203001 433583.248024
915693.824333549 732457.2683272 433583.2480271
732457.268327173 433583.2480271 0.00

CANNOT BE USED

CANNOT BE USED

CAN BE USED

PROJECTED VALUES
2015 2016 2017 2018
13200000 18480000 23100000 28875000
2876971.35313803 4027759.894393 5034699.867992 6293374.8349894
10323028.646862 14452240.10561 18065300.13201 22581625.165011
7519791.36497327 10342907.91096 12697634.8887 15583293.610879
13200 18480 23100 28875
2790037.2818887 4090852.194644 5344565.243305 6969456.5541316
800000 47124 62370 82293.75
1990037.2818887 4043728.194644 5282195.243305 6887162.8041316
696513.048661047 1415304.868125 1848768.335157 2410506.981446
1293524.23322766 2628423.326519 3433426.908148 4476655.8226855
800000 47124 62370 82293.75
1000000 55440 69300 86625
42635.5009514614 102325.2022835 89534.55199807 111918.18999759
465.52 233.99 534.73 114.83
 WACC 9%
growth rate 6%
2015 2016 2017 2018
426.598047355389 196.4980910112 411.5059387485 80.97993821176

31752

0.248730964467
0.266881028939
ltiple or trading Multiple 0.332225913621 0.2609105175323
0.114942528736
0.341772151899
 ales) or Cash BEP

ming St. Line depreciation for 5 years

 2019
36093750
7866718.54373679
28227031.4562632
19118179.5135988
36093.75
9072758.19266443
108281.25
8964476.94266443
3137566.92993255
5826910.01273188
108281.25
108281.25
139897.737496983
830.93
 2019 Terminal Value SUMMATION
536.991033893223 18221.7330151359 19874.306064356
 2021 2020 2019 2018 2017 2016
ta
capital wip
pp&e 0 0 0 0 0 0
del pp&e 0 0 0 0 0 0
d&a
capex 0 0 0 0 0
del capex 0 0 0 0
cash 926.03 569.1 490.24 313.51 239.52

trade rece 67 51 53 41 42 67
inventory 43 57 29 27 18 43
current as 1036.03 677.1 572.24 381.51 299.52 110

current liab 144 118 8 65 52 144

nwc 892.03 559.1 564.24 316.51 247.52 -34

EBIT 394 311 301 261 237 379.2
(-) Corpora 98 83 100 90 81 98.592
After Tax E 296 228 201 171 156 280.608
(+)D & A 77 73 38 33 28
(-) Delta C 0 0 0 0 0
(-)DeltaN -332.93 5.14 -247.73 -68.99 -281.52
FCFF 705.93 295.86 486.73 272.99 465.52 280.608