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Calculation And Analysis Of Payback Period And Net Present Value For Two Machines And Decision-Making
| Machine B | |||||||
| Calculation of Net Present Value | |||||||
| Years | Cash Outflow | After tax Cash Inflow+ Add back depreciation | Factors | Cash Inflow PV | Cash Outflow PV | ||
| 0 | OMR 1,10,000 | 1.00 | OMR – | OMR 1,10,000.00 | |||
| 1 | OMR 23,500 | OMR 46,543.33 | 0.87 | OMR 40,472.46 | OMR 20,434.78 | ||
| 2 | OMR 11,000 | OMR 41,363.33 | 0.76 | OMR 31,276.62 | OMR 8,317.58 | ||
| 3 | OMR 11,000 | OMR 40,733.33 | 0.66 | OMR 26,782.83 | OMR 7,232.68 | ||
| 4 | OMR 11,000 | OMR 41,223.33 | 0.57 | OMR 23,569.57 | OMR 6,289.29 | ||
| 5 | OMR 11,000 | OMR 52,283.33 | 0.50 | OMR 25,994.06 | OMR 5,468.94 | ||
| 6 | OMR 11,000 | OMR 49,273.33 | 0.43 | OMR 21,302.22 | OMR 4,755.60 | ||
| 6 | OMR 11,000 | OMR 12,500.00 | 0.43 | OMR 5,404.09 | OMR 4,755.60 | ||
| Total | OMR 1,74,801.86 | OMR 1,67,254.48 | |||||
| NPV= Total Cash Inflow PV -Total cash outflow PV | OMR 7,547.38 | ||||||
| Calculation Of Payaback period | |||||||
| Years | Cash Outflow | Cash Inflow | Cash flows | CF | |||
| 0 | -OMR 1,10,000 | -OMR 1,10,000 | -OMR 1,10,000 | ||||
| 1 | -OMR 23,500 | OMR 46,543 | OMR 23,043 | -OMR 86,957 | |||
| 2 | OMR 41,363 | OMR 41,363 | -OMR 45,593 | ||||
| 3 | OMR 40,733 | OMR 40,733 | -OMR 4,860 | ||||
| 4 | OMR 41,223 | OMR 41,223 | OMR 36,363 | ||||
| 5 | OMR 52,283 | OMR 52,283 | OMR 88,647 | ||||
| 6 | OMR 49,273 | OMR 49,273 | OMR 1,37,920 | ||||
| 6 | OMR 12,500 | OMR 12,500 | OMR 1,50,420 | ||||
| Payback period = | 3.12 | ||||||
| Machine A | |||||||
| Calculation of Net Present Value | |||||||
| Years | Cash Outflow | After tax Cash Inflow+ Add back depreciation | Factors | Cash Inflow PV | Cash Outflow PV | ||
| 0 | 1.00 | OMR – | OMR – | ||||
| 1 | OMR 26,300 | OMR 33,880 | 0.88 | OMR 29,982.30 | OMR 23,274.34 | ||
| 2 | OMR 26,300 | OMR 35,910 | 0.78 | OMR 28,122.80 | OMR 20,596.76 | ||
| 3 | OMR 26,300 | OMR 37,100 | 0.69 | OMR 25,712.16 | OMR 18,227.22 | ||
| 4 | OMR 26,300 | OMR 36,400 | 0.61 | OMR 22,324.80 | OMR 16,130.28 | ||
| 4 | OMR 26,300 | OMR 12,500 | 0.61 | OMR 7,666.48 | OMR 16,130.28 | ||
| Total | OMR 1,13,808.55 | OMR 94,358.88 | |||||
| NPV= Total Cash Inflow PV -Total cash outflow PV | OMR 19,449.67 | ||||||
| Calculation Of Payaback period | |||||||
| Years | Cash Outflow | Cash Inflow | Cash flows | CF | |||
| 0 | OMR – | OMR – | OMR – | ||||
| 1 | -OMR 26,300 | OMR 33,880 | OMR 7,580 | OMR 7,580 | |||
| 2 | OMR 35,910 | OMR 35,910 | OMR 43,490 | ||||
| 3 | OMR 37,100 | OMR 37,100 | OMR 80,590 | ||||
| 4 | OMR 36,400 | OMR 36,400 | OMR 1,16,990 | ||||
| 4 | OMR 12,500 | OMR 12,500 | OMR 1,29,490 | ||||
| Payback period = | 0.83 | ||||||
| Discount Dividend Model | |||||||
| Forecast | Forecast | Forecast | Forecast | Forecast | Forecast | ||
| 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
| 1 | 2 | 3 | 4 | 5 | 6 | ||
| Forecast Divdend | 20 | 21.80 | 23.76 | 25.90 | 28.23 | 30.77 | 33.54 |
| Forecast Divdend Growth | 9.0% | 9.0% | 9.0% | 9.0% | 9.0% | ||
| Cost of capital | 15.00% | 1.1500 | 1.3225 | 1.5209 | 1.7490 | 2.0114 | 2.3131 |
| Present Value | 18.96 | 17.97 | 17.03 | 16.14 | |||
| Terminal Value (TV) | 512.87 | ||||||
| TV discounted to present value | 293.24 | 470.53 | |||||
| TV of Dividend | 70.10 | ||||||
| Share price (cents) | 363.33 | 309.38 | |||||
| Net Assets Valuation Model | |||||||
| Total value of Equity | 7.20 | ||||||
| No of Shares Outstanding | 4.00 | ||||||
| Per share value of value of equity | 1.80 | ||||||
| Per share value of value of equity (Cents) | 180.00 | ||||||
| P/E Model | |||||||
| P/E ratio of Khalfan | 18.10 | ||||||
| EPS of Masood company | 35.00 | ||||||
| Per share value of value of equity (Cents) | 633.50 |