MBP 3.23% 3.0¢ metabolic pharmaceuticals limited

analysis of fat pill project

  1. TDF
    102 Posts.
    Produce Fat Reducing Pill Project

    ASSUMPTIONS all $000's
    $000's
    Production Plant cost $50,000
    Salvage sale price of plant after 7 years = 20% of initial $10,000
    Sales $300million in first year rising 15% each year for 5 years
    $000's
    DEPRECIATION SCHEDULE REDUCING VALUE METHOD
    Year % Beginning Book Value Depreciation Ending Book Value
    1 25.00% 50000 12500 37500
    2 25.00% 37500 9375 28125
    3 25.00% 28125 7031 21094
    4 25.00% 21094 5273 15820
    5 25.00% 15820 3955 11865
    6 25.00% 11865 2966 8899
    7 25.00% 8899 2225 6674
    43326

    PROJECTED INCOME , $000's
    YEAR
    0 1 2 3 4 5 6 7
    Revenue 300000 345000 396750 456263 524702 524702 524702
    Variable (operating) costs (55% of revenue) 165000 189750 218213 250944 288586 288586 288586
    Fixed (admin) costs 400 400 400 400 400 400 400
    Depreciation 12500 9375 7031 5273 3955 2966 2225
    EBIT 122100 145475 171106 199645 231761 232750 233491
    Taxes $36,630 $43,643 $51,332 $59,893 $69,528 $69,825 $70,047
    Net Income $85,470 $101,833 $119,774 $139,751 $162,233 $162,925 $163,444

    PROJECTED CASH FLOWS, Fat Pill Project

    Tax Rate 30%
    YEAR
    0 1 2 3 4 5 6 7
    I. Operating Cash Flow
    EBIT 122100 145475 171106 199645 231761 232750 233491
    Depreciation 12500 9375 7031 5273 3955 2966 2225
    Taxes $36,630 $43,643 $51,332 $59,893 $69,528 $69,825 $70,047
    Operating Cash Flow 171230 198493 229469 264812 305244 305541 305763
    ii. Net Working Capital
    Initial NWC -1000
    Change in NWC
    NWC Recovery 500
    Total change in NWC -1000 0 0 0 0 0 0 500
    iii. Capital Spending
    Initial Outlay -50000
    After tax salvage 9002
    Capital Spending -50000 9002


    PROJECTED TOTAL CASH FLOWS
    YEAR
    0 1 2 3 4 5 6 7
    Operating Cash Flow 0 171230 198493 229469 264812 305244 305541 305763
    Total change in NWC -1000 0 0 0 0 0 0 500
    Capital Spending -50000 0 0 0 0 0 0 9002
    Total Project Cash Flow -51000 171230 198493 229469 264812 305244 305541 315265
    Cumulative Cash Flow -51000 120230 318723 548192 813003 1118247 1423788 1739054
    Discounted Cash Flow -51000 155664 164043 172404 180870 189533 172470 161781
    Cumulative Disc Cash Flow -51000 104664 268707 441111 621981 811513 983983 1145764
    WACC 10%
    Internal Rate of Return 310%
    Payback (years) 1

    NPV $1,145,764

    No of shares + options (000's) 216000 POSSIBLE SHARE PRICE
    2005 2006 2007 2008 2009 2010 2011
    Cum. Disc Cash Flow div by no of shares $0.48 $1.24 $2.04 $2.88 $3.76 $4.56 $5.30
    Disc cash flow div no of shares times 5 $3.60 $3.80 $3.99 $4.19 $4.39 $3.99 $3.74
    net income div by no of shares times 8 (P/E =8) $3.17 $3.77 $4.44 $5.18 $6.01 $6.03 $6.05

 
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