学 海 无 涯,ConchRepublicElectronicsAnalysis,1,2,学 海 无 涯 AnalysisofConchRepublicElectronics,ThenewPDA:,Theexistingmodel:,ThereisnoinitialoutlayforNWC;andNetWorkingCapitalforthePDAswi llbe20%ofsales. Thevalueoftheequipmentinfiveyearswillbe$4.1million.,3,学 海 无 涯 IntroducingthenewPDA,itcausestheexitingPDAsalesfalldownandthepricefalldown. Therefore:salesforyear1=74000*$360-15000*$290-(80000-15000)*($290-$255) =$20015000 Variablecostforyear1=74000*$155-15000*$120=$9670000 Salesforyear2=95000*$360-15000*$290-(60000-15000)*($290-$255) =$28275000 Variablecostforyear2=95000*$155-15000*$120=$12925000,Networkingcapital=sales*20% Projectcashflow=Projectoperatingcashflow-Projectchangesinnetworkingcapital-proj ectcapitalspending Operatingcashflow=EBIT+Depreciation-Taxes ChangeinNWC=EndingNWC-BeginningNWC,Thebookvalueofequipmentafterthedepreciation=$21500000-$3,072,350-$5,265,350-$ 3,760,350-$2,685,350-$1,919,950=$4796650 Pretaxsalvagevalueofequipment=$4100000 After-taxcashflowofequipment=$4100000+($4796650-$4100000)*35%=$4343827.5,4,学 海 无 涯,Part1 1Whatisthepaybackperiodoftheproject?,Paybackperiod=3+($13,316,122.50-$11,243,440.00)/$13,316,122.50 =3.16years Whatistheprofitabilityindexoftheproject? PI=(thepresentvalueofthefuturecashflow)/(initialinvestment) PVofthefuturecashflow=$662,118.30+$5,670,737.01+$8,236,986.17 +$8,462+$11,451,133.56=$34,483,611.62 PI=$34,483,611.62/$21500000=1.60 WhatistheIRRoftheproject? IRRisthereturnthatmakestheNPV=0. Therefore:NPV=0=-$21500000+($741,572.50/(1+IRR)1)+($7,113,372.50/(1+IRR) 2)+($11,572,372.50/(1+IRR)3)+($13,316,122.50/(1+IRR)4) ($20180810/(1+IRR)5) UsetheEXCELwecangettheIRR=27.62% WhatistheNPVoftheproject? NPV=-$21500000+$662,118.30+$5,670,737.01+$8,236,986.17+$8,462,636.58 +$11,451,133.56=$12,983,611.62,5,学 海 无 涯,Part2 5.HowsensitiveistheNPVtochangeinthepriceofthenewPDA? Wesupposethepriceincrease$10,sothepricewillbe$370perunit Therefore:,6,学 海 无 涯,NPV=-$21500000+$959,439.73+$6,129,522.08+$8,772,600.80+$8,921,798.39+$11, 865,355.17=$15,148,716.18 Therefore: Thecoefficientofpricesensitive=($15,148,716.18-$12,983,611.62)/($370-$360) =$216510.46 Fromthecoefficientofthepricesensitive,wecanknowthatifthepriceincrease$1,theNP VincreaseS216510.46.,6.HowsensitiveistheNPVtochangeinquantitysoldoftheNewPDA? Wesupposethequantityincrease1000peryear. Therefore:,7,学 海 无 涯,NPV=-$21500000+$716,805.80+$5,776,963.09+$8,331,830.88+$8,547,319.37+$11, 567,597.93=$13,440,517.07 Therefore: Thecoefficientofpricesensitive=($13,440,517.07-$12,983,611.62)/1000 =$456.91 Fromthecoefficientofthequantitysensitive,wecanknowthatifthequantityincreases1 ,theNPVincrease$456.91.,Reference Ross,Stephen.(2010).Fundamentalsofcorporatefinance:Chapter10andChapter11Minic ase.Asia:McGraw-HillEducation.,