I have digested the data in Exhibit 6 to produce Modified-Exhibit#6, in the Excel Spreadsheet on my website.The management analysis in Exhibit 6 does not deduct depreciation from the project’s taxable income. I have done that in Modified-Exhibit#6.
- In Exhibit 6, the first change in Net Working Capital occurs in period 1. I have kept that assumption in Modified-Exhibit#6. It is ok to move all changes in NWC back one period, if you prefer to do so.
- The depreciation calculation uses an old formula that is no longer used in practice. I have explained the formula and derived depreciation and book values in Modified-Exhibit#6.
Suppose you are responsible for making the final decision about the Super Project, on March 1967, and you have read all the data and the analysis in “The Super Project”. Should you go ahead with the project or not? I will help you out by asking a few specific questions, the type of questions you would have to ask yourself in a real world situations.