8/10/2019 K56QTKD_ng Th Lin_Case Conch Republic Electronics, Part I, Page 377

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Name: Dang Thi Lien Class: K56QTKDCase Study - Conch Republic Electronics

Input Area:

Equipment $15,000,000

Salvage value $3,000,000

R&D $750,000 sunk cost

Marketing study $200,000 sunk cost

Year 1 Year 2 Year 3 Year 4 Year 5

Sales(units) 70,000 80,000 100,000 85,000 75,000

Depreciationrate 14.29% 24.49% 17.49% 12.49% 8.93%Sales of oldPDA 80,000 60,000

Lost sales 15,000 15,000

Price $250

VC $86

FC $3,000,000

Price of old PDA $240

Price reduction

of old PDA $20

VC of old PDA $68

Tax rate 35%NWCpercentage 20%

Required return 12%

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Salvage

BV of equipment $3,346,500

Taxes 121,275

Salvage CF $3,121,275

Net CF Time

0 ($15,000,000)

1 $1,220,225

2 $5,021,725

3 $7,728,225

4 $8,516,725

5 $13,885,100

Payback period 3.121

PI 1.592

IRR 27.79%

NPV $8,884,884.28