CASE 10 Revenues COGS at 70 Utilities 0 1 1 200 000 840 000 6 000 Crossover IRR Difference in Cashflows of two projects entered into CFLO IRR CPT Example of Crossover 100 100 0 0 1 10 70 60 2 60 50 10 3 80 20 60 IRR 18 1 23 6 8 7 CFL CFS CF NPV assumes reinvest at r opportunity cost of capital IRR assumes reinvest at IRR Reinvest at opportunity cost r is more realistic so NPV method is best NPV should generally be used to choose between mutually exclusive projects MIRR calculator steps 1 Enter positive CF s in CFLO solve for NPV 2 Use TVM keys and use NPV for PV then solve for FV 3 Use sum of PV of negative CF s for PV and solve for I this figure is the MIRR MIRR by hand MIRR FV of Inflows PV of outflows 1 n 1 EBIT Sales Revenue Costs COGS Depreciation NOWC Current Assets Current Liabilities Depreciation Basis Cost Shipping Installation Project Cash Flow EBIT 1 T Depreciation Fixed Asset Expenditures FA Change in NOWC After tax Salvage Value Revenues Prod Exp Lease FA Depr Depr EBIT EBIT 1 0 35 NOWC NOWC cons NOW Salvage AT Salvag CF CASE 11 Values in 1000 s 0 18 000 19 000 20 000 22 000 25 000 27 000 0 17 000 18 000 19 000 21 000 23 000 25 000 0 22 000 24 000 26 000 29 000 32 000 35 000 0 22 000 24 000 26 000 29 000 32 000 35 000 CASE 12 400 400 400 400 400 400 0 100 100 100 100 100 100 0 0 850 1 360 808 510 468 255 20 32 19 12 11 6 4 250 0 0 0 0 0 0 Lease 200 0 0 0 0 0 0 4 400 0 0 0 0 0 0 20 32 19 12 11 6 400 2 750 3 240 4 793 6 090 6 133 7 745 0 880 1 408 836 528 484 264 260 1 788 2 106 3 115 3 959 3 986 5 034 300 4 020 4 492 6 064 7 372 8 416 9 736 1 500 2 500 2 700 2 900 3 000 3 100 3 200 195 2 613 2 920 3 942 4 792 5 470 6 328 0 1 000 200 200 100 100 100 1 500 2 500 2 700 2 900 3 000 3 100 3 200 1 700 0 0 0 0 0 1 700 0 1 000 200 200 100 100 100 0 0 0 0 0 0 500 1 700 0 0 0 0 0 1 700 0 0 0 0 0 0 325 0 0 0 0 0 0 500 6 210 2 638 3 466 3 923 4 469 4 454 7 314 32 mirr 53 irr 11 945 npv 0 0 0 0 0 0 325 6 295 3 493 4 328 4 778 5 320 5 954 8 617 36 mirr 66 irr 16 241 64 npv Revenues Prod Exp Lease Penalty FA Depr Depr EBIT EBIT 1 0 3NOWC NOWC cons NOWC Salvage AT Salva CF EBIT EBITDA DEBT MINORITY INT PREFERRED CASH SHARE PRICE SHARES OUT EV EV EBIT EV EBITDA OBSERVED 764 0 878 0 2768 1234 0 259 0 251 4 86 38 107 86 69 48 74 49 53 99 394 6 474 1 60 773 2740 259 916 130 1 13 681 138 9 8 325 average 16 16 20 17 17 14 14 16 14 15 KMB COLGATE PROCTOR GAMBLE CLOROX CHURCH DWIGHT 2460 3789 16020 686 503 3 3551 4210 18858 859 580 4 13577 10349 70714 4249 1077 280 166 361 0 0 2 KMB EV based on EV EBIT KMB EV based on EV EBITDA MV of Equity EV price per share 42 280 10 29 187 10 73 97 51 923 35 38 830 35 98 40 EV MV equity value share price shares out total debt preferred stock minority interest cash cash equivalents Therefore MV equity EV total debt preferred stock minority interest cash cash equivalents Price per share MV shares outstanding