VICTORIA CHEMICALS (A) (financial values in millions of British pounds)
250000 7.00% 267500 675 0 12.50% 11.50%
Old A nnual Output in tons tons Out Gain/Original Output
New Annual Output in tons Price Per ton Inflation Rate Gross Margin Old Gross Margin Earning Sav ings 1-5years 6-10years 11-15years
1.25% 0.75% 0.00%
Year
1 2008
Now
1. Estimate of Incremental Gross Profit New Output (tons) Lost Output--Construction New Sales (Millions) New Gross Margin New Gross Profit Old Output Old Sales (Millions) Old Gross Profit Incremental Gross Profit 2. Estimate of Incremental WIP inventory New W IP inv entory Old WIP inv entory Incremental W IP inventory 3. Estimate of Incremental Incremental Depreciation New Depreciation More Depreciation 4. Ov erhead 5. Prelim. Engineering Costs (Sunk Cost) Pretax Incremental Profit 6. Cash Flow Adjustments Less Capital Expenditures Add back Depreciation Less Added W IP inventory 7. Free Cash Flow
-12.00
NPV = IRR =
25.79%
Discount Rate Tax Rate Inv estment Depreciable Life Salv age Value W IP Inv entory/Cost of goods Months down Prelim. Engineering cost Ov erhead/Inv estments
2 2009
3 2010
2000000 10 0
5 2012
6 2013
4 2011
267,500 (33,438) 157.99 13.8% 21.72
267,500
250,000 168.75 19.41 2.32
250,000 168.75 19.41 5.42
250,000 168.75 19.41 5.42
250,000 168.75 19.41 5.42
250,000 168.75 19.41 5.42
250,000 168.75 19.41 4.52
4.67 4.48 0.19
4.67 4.48 0.19
4.67 4.48 0.19
4.67 4.48 0.19
4.67 4.48 0.19
1.60
1.39
1.20
0.00 0.00 0.72
0.00
0.00
1.04 0.400 0.00
4.03
4.22
1.60 -0.19 1.91
1.39 0.00 4.21
1.20 0.00 4.16
180.56 13.8% 24.83
267,500
10.00% 30.00% 12000000 15 0 3.00% 1.5
180.56 13.8% 24.83
12.00
267,500
267,500
180.56 13.8% 24.83
267,500
180.56 13.8% 24.83
180.56 13.3% 23.92
7 2014 267,500 180.56 13.3% 23.92
8 2015 267,500
9 2016 267,500
10 2017 267,500
11 2018 267,500
12 2019 267,500
25000 50000 75000 100000 125000 150000 175000 200000 225000 250000 275000
25.79% -7.20% -1.85% 2.48% 6.26% 9.67% 12.83% 15.81% 18.65% 21.37% 24.00% 26.55%
Units
267,500
14 2021 267,500
15 2022 267,500
180.56 13.3% 23.92
180.56 13.3% 23.92
180.56 13.3% 23.92
180.56 12.5% 22.57
180.56 12.5% 22.57
180.56 12.5% 22.57
180.56 12.5% 22.57
180.56 12.5% 22.57
250,000 168.75 19.41 4.52
250,000 168.75 19.41 4.52
250,000 168.75 19.41 4.52
250,000 168.75 19.41 4.52
250,000 168.75 19.41 3.16
250,000 168.75 19.41 3.16
250,000 168.75 19.41 3.16
250,000 168.75 19.41 3.16
250,000 168.75 19.41 3.16
4.70 4.48 0.22
4.70 4.48 0.22
4.70 4.48 0.22
4.70 4.48 0.22
4.70 4.48 0.22
4.74 4.48 0.26
4.74 4.48 0.26
4.74 4.48 0.26
4.74 4.48 0.26
4.74 4.48 0.26
0.90 0.320 0.00
0.78 0.256 0.00
0.68 0.205 0.00
0.59 0.164 0.00
0.51 0.131 0.00
0.44 0.105 0.00
0.57 0.084 0.00
0.57 0.17 0.00
0.57 0.17 0.00
0.57
0.57
0.00
0.00
3.98
4.20
3.48
3.64
3.77
3.88
3.97
2.51
2.42
2.42
2.59
2.59
2.00 1.44 0.00 2.23
1.22 0.00 4.16
1.04 0.03 3.50
0.88 0.00 3.43
0.75 0.00 3.39
0.64 0.00 3.35
0.55 0.00 3.33
0.66 0.04 2.45
0.74 0.00 2.44
0.74 0.00 2.44
0.57 0.00 2.39
0.57 0.00 2.39
500 $ (9.35) (7.76) (6.17) (4.58) (3.00) (1.41) 0.18 1.77 3.36 4.95 6.54
Two way data table Price 525 $ 550 $ 575 $ (9.27) (9.19) (9.11) (7.60) (7.44) (7.29) (5.94) (5.70) (5.46) (4.27) (3.95) (3.63) (2.60) (2.20) (1.80) (0.93) (0.45) 0.02 0.74 1.29 1.85 2.40 3.04 3.68 4.07 4.79 5.50 5.74 6.54 7.33 7.41 8.28 9.16
600 $ (9.03) (7.13) (5.22) (3.31) (1.41) 0.50 2.40 4.31 6.22 8.12 10.03
625 $ (8.95) (6.97) (4.98) (3.00) (1.01) 0.98 2.96 4.95 6.93 8.92 10.90
650 $ (8.87) (6.81) (4.74) (2.68) (0.61) 1.45 3.52 5.58 7.65 9.71 11.78
675 (8.79) (6.65) (4.51) (2.36) (0.22) 1.93 4.07 6.22 8.36 10.51 12.65
12.01
IRR
13 2020
12.01 $ 25000 50000 75000 100000 125000 150000 175000 200000 225000 250000 275000
VICTORIA CHEMICALS (A) (financial values in millions of Briti sh pounds)
New Annual Output Annual Output (metric tons) Output Gain/Original Output Price/ton (pounds sterling) Inflation Rate (prices and costs) Gross Margin (ex. Deprec.) Old Gross Margin Energy Savings/Sales Yr. 1-5 Yr. 6-10 Yr. 11-15
250,000 7.0% 675 0.0% 12.50% 11.5% 1.25% 0.75% 0.0%
1 Year Now 2008 1. Estimate of Incremental Gross Profit New Output (tons) 267,500 Lost Output--Construction (33,438) New Sales (Millions) 157.99 New Gross Margin 13.8% New Gross Profit 21.72 Old Output Old Sales Old Gross Profit Incremental Gross Profit
250,000 168.75 19.41 2.32
2. Estimate of Incremental WIP inventory New WIP inventory 4.67 Old WIP inventory 4.48 Incremental WIP inventory 0.19 3. Estimate of Incremental Depreciation New Depreciation 1.60 4. Overhead 0.42 5. Prelim. Engineering Costs 0.50 Pretax Incremental Profit -0.20 6. Cash Flow Adjustments Less Capital Expendit -12.00 Add back Depreciation 1.60 Less Added WIP inventory -0.19 7. Free Cash Flow -12.00 1.27 NPV = IRR =
10.45
24.04%
Discount rate Tax Rate Investment Outlay (mill.) Depreciable Life (years) Salvage Value WIP Inventory/Cost of Goods Months Downtime, Construction Preliminary Engineering Costs Overhead/Investment 2 2009 267,500 180.56 13.8% 24.83
3 2010 267,500 180.56 13.8% 24.83
4 2011 267,500 180.56 13.8% 24.83
5 2012 267,500 180.56 13.8% 24.83
10.0% 30% 12.0 15 0 3.0% 1.5 0.5 3.5% 6 2013 267,500 180.56 13.3% 23.92
7 2014 267,500 180.56 13.3% 23.92
8 2015 267,500
9 2016 267,500
10 2017 267,500
11 2018 267,500
12 2019 267,500
13 2020 267,500
14 2021 267,500
15 2022 267,500
180.56 13.3% 23.92
180.56 13.3% 23.92
180.56 13.3% 23.92
180.56 12.5% 22.57
180.56 12.5% 22.57
180.56 12.5% 22.57
180.56 12.5% 22.57
180.56 12.5% 22.57
250,000 168.75 19.41 5.42
250,000 168.75 19.41 5.42
250,000 168.75 19.41 5.42
250,000 168.75 19.41 5.42
250,000 168.75 19.41 4.52
250,000 168.75 19.41 4.52
250,000 168.75 19.41 4.52
250,000 168.75 19.41 4.52
250,000 168.75 19.41 4.52
250,000 168.75 19.41 3.16
250,000 168.75 19.41 3.16
250,000 168.75 19.41 3.16
250,000 168.75 19.41 3.16
250,000 168.75 19.41 3.16
4.67 4.48 0.19
4.67 4.48 0.19
4.67 4.48 0.19
4.67 4.48 0.19
4.70 4.48 0.22
4.70 4.48 0.22
4.70 4.48 0.22
4.70 4.48 0.22
4.70 4.48 0.22
4.74 4.48 0.26
4.74 4.48 0.26
4.74 4.48 0.26
4.74 4.48 0.26
4.74 4.48 0.26
1.39 0.42
1.20 0.42
1.04 0.42
0.90 0.42
0.78 0.42
0.68 0.42
0.59 0.42
0.51 0.42
0.44 0.42
0.57 0.42
0.57 0.42
0.57 0.42
0.57 0.42
0.57 0.42
3.61
3.80
3.96
4.10
3.32
3.42
3.51
3.59
3.66
2.17
2.17
2.17
2.17
2.17
1.39 0.00 3.92
1.20 0.00 3.86
1.04 0.00 3.81
0.90 0.00 3.77
0.78 -0.03 3.08
0.68 0.00 3.07
0.59 0.00 3.05
0.51 0.00 3.02
0.44 0.00 3.00
0.57 -0.04 2.05
0.57 0.00 2.09
0.57 0.00 2.09
0.57 0.00 2.09
0.57 0.00 2.09
