ADVANCE GROSS BILLINGS -ADVANCE RECOVERY -RETENTION FUND =NET BILLINGS RETENTION PAYMENT TOTAL RECEIPTS
$25.20 $43.00 $6.45 $2.15 $34.40
$25.20
$8.80
$28.80
$36.00
$34.40
$33.00 $4.95 $1.65 $26.40 $4.20 $30.60
$0.00 $0.00 $0.00 $0.00 $4.20 $4.20
$0.00 $0.00
$28.50
$25.00 $25.00
$29.00 $29.00
$27.00 $27.00
$20.00 $20.00
$0.00 $0.00
$0.00
$3.80
$7.00
$7.40
$10.60
$4.20
$0.00
B. OUTFLOWS:
EQUIPMENT OPERATING COST TOTAL DISBURSEMENTS
$28.50
$9.50 $7.00 $16.50
C. NET CASH FLOW
($3.30)
($7.70)
HURDLE RATE IRR NPV
18% 41% $7.1701
TOTAL
$168.00 $25.20 $8.40 $134.40 $8.40 $168.00
$38.00 $108.00 $146.00 $22.00
DHAHRAN ROADS Negotiate 5% lower price but 25% advance payments 0 1 BEG 93 END 93 A. INFLOWS:
ADVANCE GROSS BILLINGS -ADVANCE RECOVERY -RETENTION FUND =NET BILLINGS RETENTION PAYMENT TOTAL RECEIPTS
2 END 94
3 END 95
4 END 96
5 END 97
6 END 98
$34.20 $8.55 $1.71 $23.94
$42.75 $10.69 $2.14 $29.93
$40.85 $10.21 $2.04 $28.60
$31.35 $7.84 $1.57 $21.95 $3.99 $25.94
$0.00 $0.00 $0.00 $0.00 $3.99 $3.99
7 END 99 TOTAL
$39.90 $10.45 $2.61 $0.52 $7.32
$23.94
$29.93
$28.60
$0.00 $0.00
$159.60 $39.90 $7.98 $111.72 $7.98 $159.60
$39.90
$7.32
$28.50
$25.00 $25.00
$29.00 $29.00
$27.00 $27.00
$20.00 $20.00
$0.00 $0.00
$0.00
$38.00 $108.00 $146.00
($1.06)
$0.93
$1.60
$5.94
$3.99
$0.00
$13.60
B. OUTFLOWS:
EQUIPMENT OPERATING COST TOTAL DISBURSEMENTS
$28.50
$9.50 $7.00 $16.50
C. NET CASH FLOW
$11.40
($9.19)
HURDLE RATE IRR NPV
18% Err:523 NPV will never be negative, so no IRR exists. $8.31
DHAHRAN ROADS - Borrowing Analysis with Kd=Rf
BASE CASE: NO DEBT, 18% EQUITY COST 0 BEG 93 A. INFLOWS: ADVANCE GROSS BILLINGS -ADVANCE RECOVERY -RETENTION FUND =NET BILLINGS RETENTION PAYMENT TOTAL RECEIPTS B. OUTFLOWS: EQUIPMENT OPERATING COST TOTAL DISBURSEMENTS C. OPERATING PROFITS (CF):
FLOW-TO-EQUITY Approach a.NET CASH FLOW (to SH) base case b.Amount borrowed c.Debt repayed d.Interest payments e. CF to equity (e=a+b-c-d) Cost of levered equity for that year PV (future CF to equity) NPV IRR
