profitability-1

# Net Present Worth method For Profitability Analysis Work Sheet For Calculating Present Value & Net Present Worth Project Title: -------------------------------Notes: 1. Rs. Values can be in Thousand of Rs. Or rounded to the nearest Rs. 1000 2. For Lines 11 & 14, company policies will dictate which tax rate, interest & discount factors to use 3. The estimated service life for this example is taken as 5 years 4. For lines 5, 6, & 7 , see Table ----------- for estimating information & basis End of Life Item Number in ( working capital & salvage value Line ) designate Line  Year  1986 1987 1988 1989 1990 1991 0 1st 2nd 3rd 4t h 5t h 1 Fixed Capital investment investment 2 Working Working Capit Capital al 3 Total capital capital investment investment (1 + 2) 4 Annual Annual Income Income (Sales) (Sales) 5 Annual Annual Manufacturing Manufacturing Cost (a) Raw Materials (b) Labour  (c) Utilities (d) Maintenance & Repairs (e) Operating Supplies (f) Laboratory Charges (g) Patents & Royalties (h) Local Taxes & Insurance (i) Plant Overhead (j) Other (explain in notes) 5-T 5-T Tota Totall of of Lin Line e5

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6 Annual Annual General General Expenses Expenses (a) Administrative (b) Distribution & Selling (c) Research & Development (d) Interest (e) Other (explain in notes) 6-T 6-T Tota Totall of of Lin Line e6 7 Total Product Product Cost Cost (5-T + 6-T) 8 Annual Annual Operating Operating Income (4 - 7) 9 Annual Annual Depreciation Depreciation 10 Income Before Tax Tax (8 - 9) 11 Income after after 34% Tax Tax (0.66 × 10) 10) 12 Annual Annual Cash Income Income (9 + 11) 11) 13 Annual Annual Cash Flow Flow (3 + 12) 12) 14 Discount Factors for 15% 15% interest interest (a) See Footnote * (b) See Footnote * * (c) See Footnote * * * (d) See Footnote * * * * 15 Annual Annual present Value Value (13 × 14) 16 Total Present Value of Annual cash Flows (Sum of Line 15 not including 0 Year) = --------- Rs. Or Thousand of Rs. Net Present Worth = (total present value of annual cash flows ) - (total capital investment) ----- --------Rs. ---Rs. or Thousand of Rs. 17 = Line 16 - Line 3 = ----------