day1MagnumTech Page 1 MAGNUM TECHNOLOGIES LTD. Rs Million Total Outlay 50 1 Application Breakup 2 Fixed Assets 30 10 6.67 3 Current Assets 20 50 4 Sources Break up 5 Equity 15 6 Term Loan 20 30 Working Capital Finance 10 NWC 7 Trade Credit 5 50 5 Margin Money 8 35 Project Cost 9 Term Loan is repayable in 5 equal instalments 10 of Rs 4 million each due at the end of every year. 11 12 Retirement of working capital and trade credit 13 at the end of project - fifth year end. 14 15 Interest rates : % age 16 Working Capital 12 Term Loan 10 17 18 Annual Revenues 60 Operating Costs (Ex Depr.) 42 19 Depreciation rate 15% WDV Method Net Salvage Value 20 Fixed Assets 5 Current Assets 20 Tax Rate 30
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Equity Funds -15Revenues 60.00 60.00 60.00 60.00 60.00Operating Costs 42.00 42.00 42.00 42.00 42.00 Book Va
Depreciation 4.50 3.83 3.25 2.76 2.35Interest on WCF 1.20 1.20 1.20 1.20 1.20Interest on TL 2.00 1.60 1.20 0.80 0.40
Profit before Tax 10.30 11.38 12.35 13.24 14.05Tax 3.09 3.41 3.70 3.97 4.22Profit after Tax 7.21 7.96 8.64 9.27 9.84Preference Dividend 0.00 0.00 0.00 0.00 0.00Net Salvage Value of Fixed Assets 5.00Net Salvage Value of Current Assets 20.00
Repayment of Term Loan 4.00 4.00 4.00 4.00 4.00Redemption of Preference Capital 0.00 0.00 0.00 0.00 0.00Repayment of WCF 10.00Retirement of Trade Creditors 5.00
Profit after Tax 7.21 7.96 8.64 9.27 9.84Preference Dividend 0.00 0.00 0.00 0.00 0.00Net Salvage Value of Fixed Assets 5.00Net Salvage Value of Current Assets 20.00Repayment of Term Loan 4.00 4.00 4.00 4.00 4.00
Redemption of Preference Capital 0.00 0.00 0.00 0.00 0.00Repayment of WCF 10.00Retirement of Trade Creditors 5.00
Initial Investment -35Operating Cash Inflows ( PAT +Depr. + Int. on TL (1-t)) 13.11 12.91 12.74 12.59 12.46
Net Cash Flow -35.00 13.11 12.91 12.74 12.59 22.46
TOTAL FUNDS METHOD
Initial Investment -50
Profit after Tax 7.21 7.96 8.64 9.27 9.84Preference Dividend 0.00 0.00 0.00 0.00 0.00Net Salvage Value of Fixed Assets 5.00Net Salvage Value of Current Assets 20.00Repayment of Term Loan 4.00 4.00 4.00 4.00 4.00Redemption of Preference Capital 0.00 0.00 0.00 0.00 0.00Repayment of WCF
Retirement of Trade Creditors
Initial Investment -50Operating Cash Inflows ( PAT + Depr.+Int. on TL (1-t) +Int. on WCF (1-t)) 13.95 13.75 13.58 13.43 13.30Terminal Cash Flow( 11+12 ) 25.00
Net Cash Flow -50.00 13.95 13.75 13.58 13.43 38.30
IRR Cost of CapitalEquity Method Err:523 0.18 15 0.08Long Term Funds Err:523 0.12 20 0.04Total Funds Err:523 0.1 35 0.12
Profit after TaxPreference DividendNet Salvage Value of Fixed AssetsNet Salvage Value of Current AssetsRepayment of Term LoanRedemption of Preference CapitalRepayment of WCF
Retirement of Trade Creditors
Initial InvestmentOperating Cash Inflows ( PAT + Depr.+Int. on TL (1-t) +Int. on WCF (1-t))Terminal Cash Flow( 11+12 )