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Victoria Chemical Corrected Spread Sheet

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Submitted By izzie365
Words 829
Pages 4
Exhibit 2
VICTORIA CHEMICALS (A)
Frank Greystock's DCF Analysis of Merseyside Project
(financial values in millions of British pounds)
Assumptions
Annual Output (metric tons)
Output Gain/Original Output
Price/ton (pounds sterling)
Inflation Rate (prices and costs)
Gross Margin (ex. Deprec.)
Old Gross Margin
Energy Savings/Sales Yr. 1-5
Yr. 6-10
Yr. 11-15

250,000
7.0%
675
3.0%
12.50%
11.5%
1.25%
0.75%
0.0%

1
Year
Now
2008
1. Estimate of Incremental Gross Profit
New Output (tons)
267,500
Lost Output--Construction
(33,438)
New Sales (Millions)
157.99
New Gross Margin
13.8%
New Gross Profit
21.72
Old Output
Old Sales
Old Gross Profit
Incremental Gross Profit

250,000
168.75
19.41
2.32

2. Estimate of Incremental WIP inventory
New WIP inventory
4.09
Old WIP inventory
4.48
Incremental WIP inventory
-0.39
3. Estimate of Incremental Depreciation
New Depreciation
1.60
Depreciation 2010
Depreciation 2012
Incremental Depreciation
1.60
4. Overhead
0.00
5. Prelim. Engineering Costs
0.00
Pretax Incremental Profit
0.72
6. Cash Flow Adjustments
Less Capital Expenditures
-12.00
Add back Depreciation
1.60
Less Added WIP inventory
0.39
7. Free Cash Flow
-12.00
2.49
NPV =
IRR =

16.78
29.6%

Discount rate
Tax Rate
Investment Outlay (mill.)
Depreciable Life (years)
Salvage Value
WIP Inventory/Cost of Goods
Months Downtime, Construction
Preliminary Engineering Costs
Overhead/Investment
2
2009
267,500
185.98
13.8%
25.57

3
2010
267,500
191.56
13.8%
26.34

4
2011
267,500
197.31
13.8%
27.13

5
2012
267,500
203.22
13.8%
27.94

10.0%
30%
12.0
15
0
3.0%
1.5
0
0.0%
6
2013
267,500
209.32
13.3%
27.74

7
2014
267,500
215.60
13.3%
28.57

8
2015
267,500
222.07
13.3%
29.42

9
2016
267,500
228.73
13.3%
30.31

10
2017
267,500
235.59
13.3%

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