Capital budgeting techniques in project management

I. Objectives and Aim

II. Key Questions

a) 2.1. Understand the needs of capital outlay?

b) 2.2. Capital outlay funding?

c) 2.3. Assumptions and factors to be considered?

d) 2.4. Stakeholder reporting?

e) 2.5. Key Performance Indicators?

III. Project Selection Criteria

IV. Projects Undertaken

V. Calculation of Discounted Cash Flows

VI. Ranking the Projects

a. NPV

b. Discounted Cash Flows

c. IRR

VII. Appendix: Country Wise Calculation

Contents:


II. Key Questions










a. NPV


c. IRR


Contents:

- Understand the capital expenditure requirement of an organization

- Identify the areas impacted

- Non-monetary factors of undertaking a project

- Help management in understanding the need of a project and importance in terms of cash flows

- Devise ways of ranking the projects and linking with limited budget to showcase Capital Rationing

- Present the usage of tools like NPV, IRR, discounted pay back to select profitable and viable projects

Identify needs and prepare ground for capital layouts

1. Objectives and Aim

AIM

Manage Portfolio of Projects supported by Capital Budgeting Techniques

Now

Next


II. Key Questions










a. NPV


c. IRR


Contents:

• 2.1. Understand the needs of capital outlay?

20XX 20XX 20XX 20XX 20XX 20XX

Routine

Improve Control

29In million USD 32 36 37 37 36

Total Loading

Routine

Routine – After Improvement

40

20XX

POSITIVE MANAGEMENT

- Projected Cash flows on undertaking system by system replacement and upgrade over a span on 7 years

- Various system related to Production, Finance, Logistics, Import & Export,HRM, Supply chain

- Cash Flow increment on optimization of working hours, workforce, Business to Business relations, Customer relations

• 2.2. Capital outlay funding?

Following this considered while deciding the funding of the major capital outlays:-

- Depreciation fund – fund created to replace the existing legacy systems. Discounted at the real interest rate (real interest rate = 1+Nominal Interest Rate/1+Inflation rate). It is done in order to reach the real value of the depreciation fund

- Reserves and Surplus – Management decided to allocate 20% of the available reserves and surplus to carry out new projects

- Loans and Advances – In case of a shortfall, company can bring in loans from the Parent company or the group company or may ask the regional HQ to charge EMI after converting it into a loan, mostly at 0% interest

• 2.3. Assumptions and factors to be considered?

- Discounting factor (Cost of Capital) – Projected Net Cash inflows (Total Monthly Cash Inflows – Total Monthly Cash Outflows) to be discounted every month at real interest rate. Real Interest rate = Singapore Interbank Offer rate/ Singapore CPI (courtesy: www.singstat.gov.sg)

o SIBOR = 1 year @ 1.06181% effective 12 Mar 2015

o Inflation rate = -0.4 % for Jan 2015, hence taken as 0

o Company defined discount rate = SIBOR + 0.93819%= 2% (real discounting rate) for 7 years

- Projected minimum life of a system = 7 years from the date of implementation

- Depreciation = 25% on the written down value basis over the 7 years.

- Asset with remaining amount to be sold at the remaining value, hence not taken into consideration

- Income tax rate on inflows = 17% per annum (as per Singapore Income Tax)

- GST – No GST on export services ( as per Singapore Income Tax)

http://www.singstat.gov.sg/


- Calculation of Cash Outflow – Following are the guidelines about what to consider as Outflows:-o Cost of Server and Operating system to be taken as under the ownership of Singapore entity (Regional

Head Quarters or RHQ) to be leased to Other entities on Operating Lease basis. Hence Singapore RHQ can claim Depreciation

o Cost of Server Set up to be charged from each entity under Service Charges

o Cost of Application – shall be treated as under the ownership of respective entity located in different regions

* All Outflows are incurred in the year 0, hence discount factor = 1** Outflows are in Singapore Dollars

- Calculation of Cash Inflows – Following are the guidelines to consider the inflows:-o Year 1 = (App.+10%)+(license@150USD/user)+1st year Infra lease + Infra set up service charges

o Year 2 – 7 = (App.*.15)+(lic. @150/user)+lease rental for infra + Infra maintenance@5000 USD/year* Outflows are in Singapore Dollars


- Lease Calculation – Total cost of Assets leased/Discounting Factor

o Total Cost of Assets = Server Cost + Operating System Cost

o Discounting Factor = SIBOR + 3.93819% = 5% for 7 years, that is, 5.786 (Inflation adjusted)• Management Decision to recover the server and OS cost earlier as it bought from Third Party outside the

group companies

- Calculation of Internal Rate of Return using Interpolation method:-

Formula = Low Rate + ((NPV at Low Rate/NPV at Low Rate - NPV at High Rate) *(Difference between High Rate and Low Rate))

- Project Ranking Methods – Projects are ranked on three methods:-- Net Present Value – Higher the NPV, Higher the rank- Discounted pay-back period – Lower the pay back period, higher the rank- Internal Rate of Return – Higher the rate, Higher the rank

- Stakeholders shall be informed about the following:-- Cash outflow and Projected inflows- Expected ROI of the project- Expected NPV of the project- Key Performance Indicators- Status of the project progress- Scope of the system

A progress status report shall be sent out every fortnightly indicating progress of the project based on EVM (Earned Value Management) measuring scope, costs and schedule, as follows:-- schedule variance = Earned Value – planned Value

- Schedule Performance Index = Earned Value/Planned value- Cost Variance = Earned Value – Actual costs- Cost Performance Index = Earned Value/ Actual Costs- Estimate At Completion =Actual Costs + (Budget At completion – Earned Value)/Cost Performance Index- Estimate To Complete = Estimate at completion – Actual Costs- To-Complete Performance Index = Budget At Completion – Earned Value/ Estimate At Completion – Actual costs

• 2.4. Stakeholder reporting

No. Description Current Condition Target

1. Lead Time Report

VAT Report

Withholding tax Report

AP Balance Report

AR Balance Report

Inventory Balance Report

Financial Report (monthly closing)

Financial Report (Quarterly closing)

Budget Report

Sale Report

3 WDS

3 WDS

1 WD

1 WD

3 WDS

7 WDS

9 WDS

5 WDS

1 WD

2 WDS

2 WDS

½ WDS

½ WDS

2 WDS

6 WDS

7 WDS

4 WDS

½ WDS

2. Lead Time Processing

AP Voucher Payments

Check Withholding tax to correct Check VAT

record to correct

Fixed assets

CKD Raw material Cost

14 WDS

2 WDS

7 WDS

1WD

4 WDS

10 WDS

1 WD

4 WDS

½ WDS

2½ WDS

• 2.5. Key Performance Indicators – Finance 1/5


1.

2.

3.

4.

5.

Lead Time Processing

Payment to Supplier

Local Payments (Cheque and Electronics Transfer (GCMS))

Overseas Payments (Electronics Transfer)

Financial Receive

Receive for sale (Local)

Receive for sale (Overseas)

Bank module

Reconcile Bank (monthly closing)

billing

Billing to supplier

Payment of petty cash

5 WDS

5 WDS

1 WD

2 WDS

2 WDS

3 WDS

3 WDS

4 WDS

4 WDS

1 WD

2 WDS

2 WDS

2 WDS

2 WDS

• 2.5. Key Performance Indicators – Finance 2/5


1. Sale order Delivery

1.1 Text file order & forecast

1.2 List of part delivery TYM(OEM)

1.3 List of part (Spare parts)

1.4 Budget ‘s forecast

1.5 Graph %

(compare budget & sale last year + this year)

1.6 Compare OEM from order (monthly)

1.7 Compare Spareparts from order (monthly)

1.8 Compare YEVN from order montly

1.9 Compare YEID from order monthly

1.10 Graph %

1.1 30 min.

1.2 150 min.

1.3

1.4 270 min.

1.5 30 min.

1.6

1.7

1.8 240 min.

1.9

1.10

1.1 Out of Scope

1.2 90 min.

1.3

1.4 Out of Scope

1.5 Out of Scope

1.6

1.7

1.8 Out of Scope

1.9

1.10

2. Sale Export (Invoice –Packing list)

(For process + report)

2.1 60 min. 2.1 30 min.

3. Text Invoice Report

3.1 Invoice TYM (key excel file)

(key system formular 4)

3.2 Invoice YEVN (by excell file )

3.3 Invoice YEID (by excell file)

3.4 Invoice YMAP (by excell file)

3.1 key excell file 30 min.

key formular 20 min

3.2 key excell file 20 min.

key formular 30 min.

3.3

3.4 key excell file 20 min

key fourmulat 30 min.

check & key system I-Global

=25 min.

3.1 40 min.

3.2 40 min.

3.3

3.4 20 min.

• 2.5. Key Performance Indicators – Sales 3/5


4. Sale Confirmation

4.1 Sale Confirmation YEVN

4.2 Sale Confirmation YEID

4.1 30 min.

4.2 30 min.

4.1 15 min.

4.2 15 min.

5. Sale by product & Model (compare with budget)

5.1 Report by Model (TYM) example 52B ,2S5

5.2 Report by product YEVN

5.3 Report by product YEID 5.1 20 min.

5.2 15 min.

5.3

5.1 10 min.

5.2 10 min.

5.3

6. Export by Customer

6.1 shipment schedule of YEVN

6.2 shipment schedule of YEID

6.3 shipment schedule of YMAP

6.4 shipment schedule of YEJP

6.1 40 min.

6.2 30 min.

6.3 30 min.

6.4 20 min.

6.1 20 min.

6.2 20 min.

6.3 20 min.

6.4 15 min.

7. Sale Volume (compare update with order & forecast

previous)

7.1 Sale Volume TYM (OEM)

7.2 Sale Volume Spare Parts

7.3 Sale Volume YEVN

7.4 Sale Volume YEID

7.5 Sale Volume YMAP

7.1

7.2

7.3 90 min.

7.4

7.5

7.1

7.2

7.3 Out of Scope

7.4

7.5

• 2.5. Key Performance Indicators – Sales 4/5


8. KPI “Delivery performance “ monthly.

8.1 Delivery report OEM

8.2 Delivery report Spare part

8.3 Delivery report YEVN

8.4 Delivery report YEID

8.1

8.2

8.3 90 min.

8.4

8.1

8.2

8.3 60min.

8.4


1. Lead time of Report

1.1 Purchasing report

- Monthly Purchased amount

- Summary of Delivery performance report

1.2 Inventory report

- High Value items

- Items separated by category

1 WD

1 WD

1 HR

1 HR

• 2.5 Key Performance Indicators – Sales 5/5

• 5. Key Performance Indicators – Purchasing and Store


II. Key Questions










a. NPV


c. IRR


Contents:

• 3. Project Selection Criteria 1/2

• 4. Project Selection Criteria 2/2

Based on above mentioned criteria's, various project in different countries were selected. Please see the next slide giving details of the countries and respective projects


II. Key Questions










a. NPV


c. IRR


Contents:

• 4. Projects Undertaken

- Several Project Undertaken

- Region Covered : Asia

- Cash Flow increment on optimization of working hours,

workforce, Business to Business relations, Customer

relations


II. Key Questions










a. NPV


c. IRR


Contents:

• 5. Calculation of Discounted Cash Flows 1/3Region India Indonesia Thailand Philippines Pakistan Cambodia Vietnam AustraliaNo. of Projects 1 2 1 2 3 1 3 2

Cash Outflow

No. of Users 55 175 40 10 30 5 20 80

- licences

-- Microsoft (@1300/User) $71,500.00 $227,500.00 $52,000.00 $13,000.00 $39,000.00 $6,500.00 $26,000.00 $104,000.00

--citrix (@265/user) $14,575.00 $46,375.00 $10,600.00 $2,650.00 $7,950.00 $1,325.00 $5,300.00 $21,200.00

-- SQL (@155/User) $8,525.00 $27,125.00 $6,200.00 $1,550.00 $4,650.00 $775.00 $3,100.00 $12,400.00

-- AD (@85/User) $4,675.00 $14,875.00 $3,400.00 $850.00 $2,550.00 $425.00 $1,700.00 $6,800.00

- Total License cost $99,275.00 $315,875.00 $72,200.00 $18,050.00 $54,150.00 $9,025.00 $36,100.00 $144,400.00

- Infrastructure

-- Server Size (in Gigabytes) 300 500 250 250 250 200 500 750

-- Server (@250/Gigabytes) $75,000.00 $125,000.00 $62,500.00 $62,500.00 $62,500.00 $50,000.00 $125,000.00 $187,500.00

-- OS $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00

-- Server set up mandays 60 90 30 30 30 10 45 60

-- Set up cost (@255/manday) $15,300.00 $22,950.00 $7,650.00 $7,650.00 $7,650.00 $2,550.00 $11,475.00 $15,300.00

Total Infra cost $95,300.00 $152,950.00 $75,150.00 $75,150.00 $75,150.00 $57,550.00 $141,475.00 $207,800.00

- Application

-- Configuration Mandays 12 20 10 5 15 3 20 30

-- Configuration (@175/Manday) $2,100.00 $3,500.00 $1,750.00 $875.00 $2,625.00 $525.00 $3,500.00 $5,250.00

-- Development Mandays 185 225 125 88 120 65 50 300

-- Development (@175/Manday) $32,375.00 $39,375.00 $21,875.00 $15,400.00 $21,000.00 $11,375.00 $8,750.00 $52,500.00

-- Testing & Training Mandays 14 14 20 10 35 14 20 30

-- Test & Train (@175/Manday) $2,450.00 $2,450.00 $3,500.00 $1,750.00 $6,125.00 $2,450.00 $3,500.00 $5,250.00

-- Deployment Mandays 25 30 22 10 29 10 18 33

-- Depolyment (@175/Manday) $4,375.00 $5,250.00 $3,850.00 $1,750.00 $5,075.00 $1,750.00 $3,150.00 $5,775.00

Total Application cost $41,300.00 $50,575.00 $30,975.00 $19,775.00 $34,825.00 $16,100.00 $18,900.00 $68,775.00

Total Cost (A) $235,875.00 $519,400.00 $178,325.00 $112,975.00 $164,125.00 $82,675.00 $196,475.00 $420,975.00

Singapore Dollars (SGD) rounded to 2 Decimal Places


Cash Inflows After Tax (CFAT)

-Year 1 $103,456.48 $152,588.03 $74,876.09 $52,456.09 $79,536.09 $38,565.70 $67,183.03 $170,609.96

-Year 2 $33,271.48 $61,304.28 $27,312.34 $21,132.34 $26,389.84 $17,670.70 $33,303.03 $60,586.21

-Year 3 $33,271.48 $61,304.28 $27,312.34 $21,132.34 $26,389.84 $17,670.70 $33,303.03 $60,586.21

-Year 4 $33,271.48 $61,304.28 $27,312.34 $21,132.34 $26,389.84 $17,670.70 $33,303.03 $60,586.21

-Year 5 $33,271.48 $61,304.28 $27,312.34 $21,132.34 $26,389.84 $17,670.70 $33,303.03 $60,586.21

-Year 6 $33,271.48 $61,304.28 $27,312.34 $21,132.34 $26,389.84 $17,670.70 $33,303.03 $60,586.21

-Year 7 $33,271.48 $61,304.28 $27,312.34 $21,132.34 $26,389.84 $17,670.70 $33,303.03 $60,586.21

Total Inflows $303,085.34 $520,413.68 $238,750.13 $179,250.13 $237,875.13 $144,589.92 $267,001.18 $534,127.23

Less Dep. $69,321.29 $112,647.09 $58,489.84 $58,489.84 $58,489.84 $47,658.39 $112,647.09 $166,804.35

Income after Dep. Before tax $233,764.05 $407,766.59 $180,260.30 $120,760.30 $179,385.30 $96,931.54 $154,354.09 $367,322.88

Less Tax @ 17% $39,739.89 $69,320.32 $30,644.25 $20,529.25 $30,495.50 $16,478.36 $26,240.20 $62,444.89

Income after tax and Dep. $194,024.17 $338,446.27 $149,616.05 $100,231.05 $148,889.80 $80,453.18 $128,113.89 $304,877.99

Depreciation (add back) $69,321.29 $112,647.09 $58,489.84 $58,489.84 $58,489.84 $47,658.39 $112,647.09 $166,804.35

CFAT $263,345.45 $451,093.36 $208,105.88 $158,720.88 $207,379.63 $128,111.56 $240,760.99 $471,682.34

Total Discounted Cash Flows

for 7 yrs @ PVF 2%$246,966.73 $421,676.37 $194,809.29 $148,396.95 $194,396.47 $119,576.81 $224,549.69 $441,763.05

Net Present Value $11,091.73 -$97,723.63 $16,484.29 $35,421.95 $30,271.47 $36,901.81 $28,074.69 $20,788.05

• 5. Calculation of Discounted Cash Flows 2/3


India Indonesia Thailand Philippines Pakistan Cambodia Vietnam Australia

-- Server (@250/Gigabytes) $75,000.00 $125,000.00 $62,500.00 $62,500.00 $62,500.00 $50,000.00 $125,000.00 $187,500.00

-- OS $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00 $5,000.00

Total (A) $80,000.00 $130,000.00 $67,500.00 $67,500.00 $67,500.00 $55,000.00 $130,000.00 $192,500.00

Dis. fac. 5% for 7 yrs (B) 5.786 5.786 5.786 5.786 5.786 5.786 5.786 5.786

Yearly lease (A/B) $13,826.48 $22,468.03 $11,666.09 $11,666.09 $11,666.09 $9,505.70 $22,468.03 $33,269.96

Lease over 7 years $96,785.34 $157,276.18 $81,662.63 $81,662.63 $81,662.63 $66,539.92 $157,276.18 $232,889.73

Lease Calculation


Cost Of Server and Operating System$80,000.00 $130,000.00 $67,500.00 $67,500.00 $67,500.00 $55,000.00 $130,000.00 $192,500.00

Year 1 $20,000.00 $32,500.00 $16,875.00 $16,875.00 $16,875.00 $13,750.00 $32,500.00 $48,125.00

Year 2 $15,000.00 $24,375.00 $12,656.25 $12,656.25 $12,656.25 $10,312.50 $24,375.00 $36,093.75

Year 3 $11,250.00 $18,281.25 $9,492.19 $9,492.19 $9,492.19 $7,734.38 $18,281.25 $27,070.31

Year 4 $8,437.50 $13,710.94 $7,119.14 $7,119.14 $7,119.14 $5,800.78 $13,710.94 $20,302.73

Year 5 $6,328.13 $10,283.20 $5,339.36 $5,339.36 $5,339.36 $4,350.59 $10,283.20 $15,227.05

Year 6 $4,746.09 $7,712.40 $4,004.52 $4,004.52 $4,004.52 $3,262.94 $7,712.40 $11,420.29

Year 7 $3,559.57 $5,784.30 $3,003.39 $3,003.39 $3,003.39 $2,447.20 $5,784.30 $8,565.22

Total Sum $69,321.29 $112,647.09 $58,489.84 $58,489.84 $58,489.84 $47,658.39 $112,647.09 $166,804.35

Depreciation Schedule

• 5. Calculation of Discounted Cash Flows 3/3


II. Key Questions










a. NPV


c. IRR


Contents:

• Based on NPV

• Based on Discounted Pay Back Period

• Based on Internal Rate of Return (IRR)

• 7. Ranking the Projects

• 7. Net Present Value – In Brief

• 7. Ranking the Projects –NPV 1/3


NPV $59,774.90 ($516,662.38) $97,935.33 $217,202.15 $166,649.87 $224,236.79 $210,856.24 $128,250.85

Ranking 7 8 6 2 4 1 3 5

On the NPV raking basis, a company can select the projects starting with the project ranked higher. For example a company has SGD 1 Million at its disposal for various project.(assuming projects to be mutually exclusive and indivisible):

Project Rank Capital Outlay Budget Available Remaining

Cambodia 1 $82,675.00 $1,000,000.00 $917,325.00

Philippines 2 $112,975.00 $917,325.00 $804,350.00

Vietnam 3 $196,475.00 $804,350.00 $607,875.00

Pakistan 4 $164,125.00 $607,875.00 $443,750.00

Australia 5 $420,975.00 $443,750 $22,775.00

5 of the 7 (profitable) can be selected based on NPV ranking for the present year


Outflow $235,875.00 $519,400.00 $178,325.00 $112,975.00 $164,125.00 $82,675.00 $196,475.00 $420,975.00

• 7. Discounted Pay Back Period– In Brief


Outflow $235,875.00 $519,400.00 $178,325.00 $112,975.00 $164,125.00 $82,675.00 $196,475.00 $420,975.00


Year 1 $148,356.49 $389,818.57 $114,583.92 $67,477.64 $96,591.96 $49,001.44 $136,389.79 $274,124.49

Year 2 $119,362.52 $336,929.01 $90,726.93 $48,550.88 $73,470.92 $33,219.23 $105,838.79 $219,892.95

Year 3 $91,537.79 $286,052.68 $67,844.60 $30,502.09 $51,310.10 $18,159.48 $76,863.02 $168,170.28

Year 4 $64,700.36 $236,891.72 $45,783.64 $13,179.90 $29,956.50 $3,698.70 $49,173.18 $118,524.66

Year 5 $38,713.94 $189,222.48 $24,429.28 0.27 $9,295.64 0.09 $22,554.06 $70,634.00

Year 6 $13,475.87 $142,876.00 $3,695.14 0.23 0.45 $24,257.03

Year 7 0.55 $97,723.63 0.18 0.54

Pay back period 6.55 yrs > 7yrs 6.18 yrs 4.27yrs 5.23 yrs 4.09 yrs 5.45 yrs 6.54 yrs

Ranking 7 8 5 2 3 1 4 6


Cambodia 1 $82,675.00 $1,000,000.00 $917,325.00

Philippines 2 $112,975.00 $917,325.00 $804,350.00

Pakistan 3 $164,125.00 $804,350.00 $640,225.00

Vietnam 4 $196,475.00 $640,225.00 $443,750.00

Thailand 5 $178,325.00 $443,750.00 $265,425.00

India 7 $265,425.00 $235,875.00 $29,550.00

• 7. Ranking the Projects - Discounted Pay-back Period 2/3

6 of the 7 (profitable) can be selected based on Discounted pay-back period ranking for the present year. Budget available is insufficient for Australian Project hence Indian project has been selected.

• 7. Internal Rate of Return – In Brief


Outflow $235,875.00 $519,400.00 $178,325.00 $112,975.00 $164,125.00 $82,675.00 $196,475.00 $420,975.00


Cambodia 1 $82,675.00 $1,000,000.00 $917,325.00

Philippines 2 $112,975.00 $917,325.00 $804,350.00

Pakistan 3 $164,125.00 $804,350.00 $640,225.00

Vietnam 4 $196,475.00 $640,225.00 $443,750.00

Thailand 5 $178,325.00 $443,750.00 $265,425.00

India 7 $265,425.00 $235,875.00 $29,550.00

• 7. Ranking the Projects – Internal Rate of Return 3/3

6 of the 7 (profitable) can be selected based on Internal Rate of Return ranking for the present year. Budget available is insufficient for Australian Project hence Indian project has been selected.


IRR 3.5122 (3.9035) 4.8449 11.3583 7.7663 14.6489 6.1940 3.5523

Ranking 7 8 5 2 3 1 4 6


II. Key Questions










a. NPV


c. IRR


Contents:

India Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 total

Outflow -$235,875.00 -$235,875.00

Inflows $103,456.48 $33,271.48 $33,271.48 $33,271.48 $33,271.48 $33,271.48 $33,271.48 $303,085.34

Less Dep. $20,000.00 $15,000.00 $11,250.00 $8,437.50 $6,328.13 $4,746.09 $3,559.57 $69,321.29

Net $83,456.48 $18,271.48 $22,021.48 $24,833.98 $26,943.35 $28,525.38 $29,711.91 $233,764.05

Tax @ 17% $14,187.60 $3,106.15 $3,743.65 $4,221.78 $4,580.37 $4,849.32 $5,051.02 $39,739.89

Net after Tax $69,268.88 $15,165.33 $18,277.83 $20,612.20 $22,362.98 $23,676.07 $24,660.88 $194,024.17

Dep $20,000.00 $15,000.00 $11,250.00 $8,437.50 $6,328.13 $4,746.09 $3,559.57 $69,321.29

total $89,268.88 $30,165.33 $29,527.83 $29,049.70 $28,691.11 $28,422.16 $28,220.45 $263,345.45

p/v Factor 0.980 0.961 0.942 0.924 0.906 0.888 0.871

$87,518.51 $28,993.97 $27,824.73 $26,837.43 $25,986.42 $25,238.07 $24,567.60 $246,966.73

NPV $11,091.73

Outflow -$235,875.00

Discounting rate 0.962 0.925 0.889 0.855 0.822 0.790 0.760

Discounted PV $85,835.46 $27,889.54 $26,250.13 $24,831.81 $23,582.00 $22,462.45 $21,445.23 $232,296.61

NPV -$3,578.39

IRR 3.5122

Appendix: Country Wise Calculation 1/8

Indonesia Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 total

Outflow -$519,400.00 -$519,400.00

Inflows $152,588.03 $61,304.28 $61,304.28 $61,304.28 $61,304.28 $61,304.28 $61,304.28 $520,413.68

Less Dep. $32,500.00 $24,375.00 $18,281.25 $13,710.94 $10,283.20 $7,712.40 $5,784.30 $112,647.09

Net $120,088.03 $36,929.28 $43,023.03 $47,593.34 $51,021.07 $53,591.87 $55,519.97 $407,766.59

Tax @ 17% $20,414.96 $6,277.98 $7,313.91 $8,090.87 $8,673.58 $9,110.62 $9,438.40 $69,320.32

Net after Tax $99,673.06 $30,651.30 $35,709.11 $39,502.47 $42,347.49 $44,481.26 $46,081.58 $338,446.27

Dep $32,500.00 $24,375.00 $18,281.25 $13,710.94 $10,283.20 $7,712.40 $5,784.30 $112,647.09

total $132,173.06 $55,026.30 $53,990.36 $53,213.41 $52,630.69 $52,193.66 $51,865.88 $451,093.36

p/v Factor 0.980 0.961 0.942 0.924 0.906 0.888 0.871

$129,581.43 $52,889.56 $50,876.32 $49,160.96 $47,669.24 $46,346.47 $45,152.37 $421,676.37

NPV -$97,723.63

Outflow -$519,400.00


Discounted PV $137,537.00 $59,583.16 $60,833.96 $62,391.80 $64,212.88 $66,263.96 $68,520.11 $519,342.88

NPV -$57.12

IRR -3.9035


Thailand Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 total

Outflow -$178,325.00 -$178,325.00

Inflows $74,876.09 $27,312.34 $27,312.34 $27,312.34 $27,312.34 $27,312.34 $27,312.34 $238,750.13

Less Dep. $16,875.00 $12,656.25 $9,492.19 $7,119.14 $5,339.36 $4,004.52 $3,003.39 $58,489.84

Net $58,001.09 $14,656.09 $17,820.15 $20,193.20 $21,972.99 $23,307.82 $24,308.95 $180,260.30

Tax @ 17% $9,860.19 $2,491.54 $3,029.43 $3,432.84 $3,735.41 $3,962.33 $4,132.52 $30,644.25

Net after Tax $48,140.91 $12,164.56 $14,790.73 $16,760.36 $18,237.58 $19,345.49 $20,176.43 $149,616.05

Dep $16,875.00 $12,656.25 $9,492.19 $7,119.14 $5,339.36 $4,004.52 $3,003.39 $58,489.84

total $65,015.91 $24,820.81 $24,282.91 $23,879.50 $23,576.93 $23,350.01 $23,179.82 $208,105.88

p/v Factor 0.980 0.961 0.942 0.924 0.906 0.888 0.871

$63,741.08 $23,856.98 $22,882.33 $22,060.96 $21,354.35 $20,734.14 $20,179.43 $194,809.29

NPV $16,484.29

Outflow -$178,325.00


Discounted PV $61,919.91 $22,513.20 $20,976.49 $19,645.72 $18,473.14 $17,424.14 $16,473.46 $177,426.07

NPV -$898.93

IRR 4.8449


Philippines Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 total

Outflow -$112,975.00 -$112,975.00

Inflows $52,456.09 $21,132.34 $21,132.34 $21,132.34 $21,132.34 $21,132.34 $21,132.34 $179,250.13

Less Dep. $16,875.00 $12,656.25 $9,492.19 $7,119.14 $5,339.36 $4,004.52 $3,003.39 $58,489.84

Net $35,581.09 $8,476.09 $11,640.15 $14,013.20 $15,792.99 $17,127.82 $18,128.95 $120,760.30

Tax @ 17% $6,048.79 $1,440.94 $1,978.83 $2,382.24 $2,684.81 $2,911.73 $3,081.92 $20,529.25

Net after Tax $29,532.31 $7,035.16 $9,661.33 $11,630.96 $13,108.18 $14,216.09 $15,047.03 $100,231.05

Dep $16,875.00 $12,656.25 $9,492.19 $7,119.14 $5,339.36 $4,004.52 $3,003.39 $58,489.84

total $46,407.31 $19,691.41 $19,153.51 $18,750.10 $18,447.53 $18,220.61 $18,050.42 $158,720.88

p/v Factor 0.980 0.961 0.942 0.924 0.906 0.888 0.871

$45,497.36 $18,926.76 $18,048.78 $17,322.19 $16,708.50 $16,179.38 $15,713.98 $148,396.95

NPV $35,421.95

Outflow -$112,975.00


Discounted PV $41,435.09 $15,697.87 $13,633.09 $11,916.03 $10,467.63 $9,231.13 $8,165.09 $110,545.93

NPV -$2,429.07

IRR 11.3583


Pakistan Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 total

Outflow -$164,125.00 -$164,125.00

Inflows $79,536.09 $26,389.84 $26,389.84 $26,389.84 $26,389.84 $26,389.84 $26,389.84 $237,875.13

Less Dep. $16,875.00 $12,656.25 $9,492.19 $7,119.14 $5,339.36 $4,004.52 $3,003.39 $58,489.84

Net $62,661.09 $13,733.59 $16,897.65 $19,270.70 $21,050.49 $22,385.32 $23,386.45 $179,385.30

Tax @ 17% $10,652.39 $2,334.71 $2,872.60 $3,276.02 $3,578.58 $3,805.51 $3,975.70 $30,495.50

Net after Tax $52,008.71 $11,398.88 $14,025.05 $15,994.68 $17,471.90 $18,579.82 $19,410.76 $148,889.80

Dep $16,875.00 $12,656.25 $9,492.19 $7,119.14 $5,339.36 $4,004.52 $3,003.39 $58,489.84

total $68,883.71 $24,055.13 $23,517.24 $23,113.82 $22,811.26 $22,584.34 $22,414.14 $207,379.63

p/v Factor 0.980 0.961 0.942 0.924 0.906 0.888 0.871

$67,533.04 $23,121.04 $22,160.82 $21,353.60 $20,660.86 $20,054.24 $19,512.86 $194,396.47

NPV $30,271.47

Outflow -$164,125.00


Discounted PV $63,781.21 $20,623.40 $18,668.74 $16,989.35 $15,524.96 $14,231.96 $13,078.44 $162,898.06

NPV -$1,226.94

IRR 7.7663


Cambodia Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 total

Outflow -$82,675.00 -$82,675.00

Inflows $38,565.70 $17,670.70 $17,670.70 $17,670.70 $17,670.70 $17,670.70 $17,670.70 $144,589.92

Less Dep. $13,750.00 $10,312.50 $7,734.38 $5,800.78 $4,350.59 $3,262.94 $2,447.20 $47,658.39

Net $24,815.70 $7,358.20 $9,936.33 $11,869.92 $13,320.12 $14,407.76 $15,223.50 $96,931.54

Tax @ 17% $4,218.67 $1,250.89 $1,689.18 $2,017.89 $2,264.42 $2,449.32 $2,587.99 $16,478.36

Net after Tax $20,597.03 $6,107.31 $8,247.15 $9,852.04 $11,055.70 $11,958.44 $12,635.50 $80,453.18

Dep $13,750.00 $10,312.50 $7,734.38 $5,800.78 $4,350.59 $3,262.94 $2,447.20 $47,658.39

total $34,347.03 $16,419.81 $15,981.53 $15,652.82 $15,406.28 $15,221.38 $15,082.71 $128,111.56

p/v Factor 0.980 0.961 0.942 0.924 0.906 0.888 0.871

$33,673.56 $15,782.21 $15,059.75 $14,460.78 $13,953.95 $13,516.15 $13,130.41 $119,576.81

NPV $36,901.81

Outflow -$82,675.00


Discounted PV $29,866.99 $12,415.73 $10,508.11 $8,949.55 $7,659.65 $6,580.62 $5,670.15 $81,650.80

NPV -$1,024.20

IRR 14.6489


Vietnam Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 total

Outflow -$196,475.00 -$196,475.00

Inflows $67,183.03 $33,303.03 $33,303.03 $33,303.03 $33,303.03 $33,303.03 $33,303.03 $267,001.18

Less Dep. $32,500.00 $24,375.00 $18,281.25 $13,710.94 $10,283.20 $7,712.40 $5,784.30 $112,647.09

Net $34,683.03 $8,928.03 $15,021.78 $19,592.09 $23,019.82 $25,590.62 $27,518.72 $154,354.09

Tax @ 17% $5,896.11 $1,517.76 $2,553.70 $3,330.66 $3,913.37 $4,350.41 $4,678.18 $26,240.20

Net after Tax $28,786.91 $7,410.26 $12,468.07 $16,261.43 $19,106.45 $21,240.22 $22,840.54 $128,113.89

Dep $32,500.00 $24,375.00 $18,281.25 $13,710.94 $10,283.20 $7,712.40 $5,784.30 $112,647.09

total $61,286.91 $31,785.26 $30,749.32 $29,972.37 $29,389.66 $28,952.62 $28,624.84 $240,760.99

p/v Factor 0.980 0.961 0.942 0.924 0.906 0.888 0.871

$60,085.21 $30,551.00 $28,975.78 $27,689.84 $26,619.12 $25,709.10 $24,919.65 $224,549.69

NPV $28,074.69

Outflow -$196,475.00


Discounted PV $57,277.49 $27,762.48 $25,100.61 $22,865.78 $20,954.42 $19,292.35 $17,826.11 $191,079.24

NPV -$5,395.76

IRR 6.1940


Australia Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 total

Outflow -$420,975.00 -$420,975.00

Inflows $170,609.96 $60,586.21 $60,586.21 $60,586.21 $60,586.21 $60,586.21 $60,586.21 $534,127.23

Less Dep. $48,125.00 $36,093.75 $27,070.31 $20,302.73 $15,227.05 $11,420.29 $8,565.22 $166,804.35

Net $122,484.96 $24,492.46 $33,515.90 $40,283.48 $45,359.16 $49,165.92 $52,021.00 $367,322.88

Tax @ 17% $20,822.44 $4,163.72 $5,697.70 $6,848.19 $7,711.06 $8,358.21 $8,843.57 $62,444.89

Net after Tax $101,662.52 $20,328.74 $27,818.20 $33,435.29 $37,648.10 $40,807.72 $43,177.43 $304,877.99

Dep $48,125.00 $36,093.75 $27,070.31 $20,302.73 $15,227.05 $11,420.29 $8,565.22 $166,804.35

total $149,787.52 $56,422.49 $54,888.51 $53,738.02 $52,875.15 $52,228.00 $51,742.64 $471,682.34

p/v Factor 0.980 0.961 0.942 0.924 0.906 0.888 0.871

$146,850.51 $54,231.54 $51,722.67 $49,645.62 $47,890.66 $46,376.97 $45,045.08 $441,763.05

NPV $20,788.05

Outflow -$420,975.00


Discounted PV $144,026.46 $52,165.77 $48,795.68 $45,935.49 $43,459.52 $41,276.55 $39,320.16 $414,979.63

NPV -$5,995.37

IRR 3.5523


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