apple itv project

7/30/2019 Apple iTV Project

1/25

Year 0 Year 1 Year 2 Year 3

Sales Revenue 780 992.91 1228.82

COGS 312 397.16 491.53

Marketing Expenses 70.2 89.36 110.59G&A Expenses for iTV 57.75 60.64 63.67

Expansion cost

Advertising Expenses 126 132.3 138.92

Depreciation 220 220 220

Operating Income -5.95 93.45 204.12

Tax @ 40% -2.38 37.38 81.65

Net Income -3.57 56.07 122.47

Total Investments (Million in $) 2200 2251.48 2265.53 2281.10ROIC (%) -0.16 2.47 5.37

Annualized Return (%)

Euity Risk Premium (%)

Risk-free rate (%)

Beta

Cost of Equity (%)

Default Spread (%)Risk-free rate (%)

Cost of Debt (%)

Cost of Capital (%)

Investments: Year 0 Year 1 Year 2 Year 3

Investment in Assets -2200 0 0 0

Accumulated Depreciation 0 220 440 660sis of investment after depreciation ( 2200 1980 1760 1540

opportunity Cost

Net Working Capital 51.48 65.53 81.10

Changes in net working capital 0 -51.48 -14.05 -15.57

Total cashflows of investments -2200 -51.48 -14.05 -15.57

Appl

Income Statement

Cashflows of iTV

Increamental Cashflows


2/25


Sales Revenue 0 780 992.91 1228.82

Operating Costs 0 565.95 679.46 804.71

Taxes 0 -2.38 37.38 81.65

Cash flows from operations 0 216.43 276.07 342.47

Total cashflow of investment -2200 -51.48 -14.05 -15.57

Total cash flow of project -2200 164.95 262.02 326.90

NPV (Millions of USD) 780.25

IRR 12.73%

Investments: Year 0 Year 1 Year 2 Year 3

Investment in Assets -2200 0 0 0

Accumulated Depreciation 0 220 440 660

sis of investment after depreciation ( 2200 1980 1760 1540

Net Working Capital 0 51.48 65.53 81.10Changes in net working capital 0 -51.48 -14.05 -15.57

Total cashflows of investments -2200 -51.48 -14.05 -15.57


Sales Revenue 0 780 992.91 1228.82

Operating Costs 0 565.95 679.46 804.71

Taxes 0 -2.38 37.38 81.65

Cash flows from operations 0 216.43 276.07 342.47Total cashflow of investment -2200 -51.48 -14.05 -15.57

Total cash flow of project -2200 164.95 262.02 326.90


IRR 13.19%

Net Working Capital (Mil. of $) NPV

175.13 780.25

0.00 868.20NPV Changes (%) 11.27

Cashflows of iTV (M

Increamental Cashflows for i

780.25

720.00

740.00

760.00

780.00

800.00

820.00

840.00

860.00880.00

Net


3/25


4/25

Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

1489.76 1777.87 2095.52 2222.93 2358.08 2501.45 2653.54

595.90 711.15 838.21 889.17 943.23 1000.58 1061.42

134.08 160.01 188.60 200.06 212.23 225.13 238.8266.85 70.20 73.71 77.39 81.26 85.32 89.59

563.08

145.86 153.15 160.81 168.85 177.29 186.16 195.47

220 220 220 220 220 220 220

327.06 463.37 51.12 667.45 724.07 784.26 848.25

130.82 185.35 20.45 266.98 289.63 313.70 339.30

196.24 278.02 30.67 400.47 434.44 470.56 508.95

2298.32 2317.34 2338.30 2346.71 2355.63 2365.10 2375.138.54 12.00 1.31 17.07 18.44 19.90 21.43


0 0 0 0 0 120

880 1100 1320 1540 1760 1980 22001320 1100 880 660 440 220 0

98.32 117.34 138.30 146.71 155.63 165.10 175.13

-17.22 -19.02 -20.96 -8.41 -8.92 -9.46 -10.04

-17.22 -19.02 -20.96 -8.41 -8.92 -9.46 109.96

7.13

e iTV

(Million of USD)

5

10.36

3.5

9.68

1.18

0.853.5

4.35

(Millions of USD)

or iTV (Millions of USD)


5/25


1489.76 1777.87 2095.52 2222.93 2358.08 2501.45 2653.54

942.69 1094.51 1824.40 1335.48 1414.02 1497.20 1585.29

130.82 185.35 20.45 266.98 289.63 313.70 339.30

416.24 498.02 250.67 620.47 654.44 690.56 728.95

-17.22 -19.02 -20.96 -8.41 -8.92 -9.46 109.96

399.02 479.00 229.71 612.06 645.52 681.09 838.91


0 0 0 0 0 0 120

880 1100 1320 1540 1760 1980 2200

1320 1100 880 660 440 220 0

98.32 117.34 138.30 146.71 155.63 165.10 0.00-17.22 -19.02 -20.96 -8.41 -8.92 -9.46 165.10

-17.22 -19.02 -20.96 -8.41 -8.92 -9.46 285.10


1489.76 1777.87 2095.52 2222.93 2358.08 2501.45 2653.54

942.69 1094.51 1824.40 1335.48 1414.02 1497.20 1585.29

130.82 185.35 20.45 266.98 289.63 313.70 339.30

416.24 498.02 250.67 620.47 654.44 690.56 728.95-17.22 -19.02 -20.96 -8.41 -8.92 -9.46 285.10

399.02 479.00 229.71 612.06 645.52 681.09 1014.05

illions of USD) (10Y)

TV (Millions of USD) (10Y)

868.20

Working Capital vs. NPV


6/25


7/25

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

No. of TVs sold in USA (ml) 30 31.2 32.45 33.75 35.10 36.50

Units sold by Apple (ml) 0.78 0.97 1.18 1.40 1.64

Inflation adjusted unit price ($) 1000 1020 1040.4 1061.21 1082.43

Sales Revenue ($ in millions) 780 992.91 1228.82 1489.76 1777.87



Inflation adjusted unit cost ($) 400 408 416.16 424.483 432.973

COGS ($ in millions) 312 397.16 491.53 595.90 711.15


Total Asset Value 2200Depreciation 220 220 220 220 220

Accumulated Depreciation 220 440 660 880 1100

Net Asset Value 2200 1980 1760 1540 1320 1100

Salvage Value

After-Tax Salvage Value


Commission for Retailers 62.4 79.43 98.31 119.18 142.23

Commision for Sales People 7.8 9.93 12.29 14.90 17.78

Marketing Expenses 70.2 89.36 110.59 134.08 160.01


Apples Total G&A Expenses 500 577.5 606.38 636.69 668.53 701.95

G&A Expenses for iTV 57.75 60.64 63.67 66.85 70.20


Units of PC displays 1.2 1.38 1.59 1.83 2.10 2.41

Units of PC displays & iTV 2.16 2.56 3.01 3.50 4.06Expansion cost ($, millions)


Ad. Expenses (without iTV) 1000 1050 1102.5 1157.63 1215.51 1276.28

Ad. Expenses (with iTV) 1176 1234.8 1296.54 1361.37 1429.44

iTV's Ad. Expenses 126 132.3 138.92 145.86 153.15

Table: Depreciation ($ in millions)

Table: Sales Revenue

Table: Cost of Goods Sold

Table: Marketing Expenses ($ in millions

200

Table: G&A Expenses ($ in millions)

120

Table: Advertising Expenses ($ in millions

Table: Production Facilities and Costs (milli


8/25


A/C Receivables 39 49.65 61.44 74.49 88.89

Inventory 31.2 39.72 49.15 59.59 71.11

A/C Payables 18.72 23.83 29.49 35.75 42.67

Net Working Capital 51.48 65.53 81.10 98.32 117.34

Table: Working Capital ($ in millions)


9/25


10/25

Year 6 Year 7 Year 8 Year 9 Year 10

37.96 39.48 41.06 42.70 44.41

1.90 1.97 2.05 2.13 2.22

1104.08 1126.16 1148.69 1171.66 1195.09

2095.52 2222.93 2358.08 2501.45 2653.54


1.90 1.97 2.05 2.13 2.22

441.632 450.465 459.474 468.664 478.037

838.21 889.17 943.23 1000.58 1061.42


220 220 220 220 220

1320 1540 1760 1980 2200

880 660 440 220 0


167.64 177.83 188.65 200.12 212.28

20.96 22.23 23.58 25.01 26.54

188.60 200.06 212.23 225.13 238.82


737.05 773.91 812.60 853.23 895.89

73.71 77.39 81.26 85.32 89.59


2.78 3.19 3.67 4.22 4.85

4.67 5.17 5.72 6.36 7.08563.08


1340.1 1407.1 1477.46 1551.33 1628.89

1500.91 1575.95 1654.75 1737.49 1824.36

160.81 168.85 177.29 186.16 195.47

)

ns)


11/25


104.78 111.15 117.90 125.07 132.68

83.82 88.92 94.32 100.06 106.14

50.29 53.35 56.59 60.03 63.69

138.30 146.71 155.63 165.10 175.13


12/25


Sales Revenue 0.00 780.00 992.91 1228.82 1489.76

COGS 0 312.00 397.16 491.53 595.90

Marketing Expenses 70.2 89.36 110.59 134.08G&A Expenses for iTV 57.75 60.64 63.67 66.85

Expansion cost

Advertising Expenses 126 132.3 138.92 145.86

Depreciation 220 220 220 220

Operating Income -5.95 93.45 204.12 327.06

Tax @ 40% -2.38 37.38 81.65 130.82

Net Income -3.57 56.07 122.47 196.24

Investments: Year 0 Year 1 Year 2 Year 3 Year 4

Investment in Assets -2200 0 0 0 0

Accumulated Depreciation 0 220 440 660 880

of investment after depreciatio 2200 1980 1760 1540 1320


Changes in net working capital 0 -51.48 -14.05 -15.57 -17.22

Total cashflows of investments -2200 -51.48 -14.05 -15.57 -17.22


Sales Revenue 0.00 780.00 992.91 1228.82 1489.76

Operating Costs 0.00 565.95 679.46 804.71 942.69

Taxes 0.00 -2.38 37.38 81.65 130.82

Cash flows from operations 0.00 216.43 276.07 342.47 416.24

Total cashflow of investment -2200 -51.48 -14.05 -15.57 -17.22

Total cash flow of project -2200 164.95 262.02 326.90 399.02


IRR 15.00%

Market Share (%) NPV & Changes

5 780.25

7 445.77

Increamental Cashflows for iTV (Mill

Apple iTV

Income Statement (Million of

Cashflows of iTV (Millions of

1200

1400


13/25

0

200

400

600

800


14/25


1777.87 2095.52 2445.22 2829.70 3251.89 3714.96

711.15 838.21 978.09 1131.88 1300.76 1485.98

160.01 188.60 200.06 212.23 225.13 238.8270.20 73.71 77.39 81.26 85.32 89.59

563.08

153.15 160.81 168.85 177.29 186.16 195.47

220 220 220 220 220 220

463.37 51.12 800.83 1007.04 1234.52 1485.10

185.35 20.45 320.33 402.82 493.81 594.04

278.02 30.67 480.50 604.22 740.71 891.06


0 0 0 0 0 120

1100 1320 1540 1760 1980 2200

1100 880 660 440 220 0

117.34 138.30 161.38 186.76 214.62 245.19

-19.02 -20.96 -23.08 -25.38 -27.86 -30.56

-19.02 -20.96 -23.08 -25.38 -27.86 89.44


1777.87 2095.52 2445.22 2829.70 3251.89 3714.96

1094.51 1824.40 1424.40 1602.66 1797.37 2009.86

185.35 20.45 320.33 402.82 493.81 594.04

498.02 250.67 700.50 824.22 960.71 1111.06

-19.02 -20.96 -23.08 -25.38 -27.86 89.44

479.00 229.71 677.42 798.85 932.85 1200.50

ions of USD)

USD)

USD)

7% Market

Share upto

Year 10

Market Share vs. NPV


15/25

5% Market

Share from

Year 6-10

780.25

.


16/25


No. of TVs sold in USA (ml) 30 31.2 32.45 33.75 35.10 36.50


Inflation adjusted unit price ($) 1000 1020 1040.4 1061.21 1082.43

Sales Revenue ($ in millions) 780 992.91 1228.82 1489.76 1777.87


Units sold by Apple (ml) 0 0.78 0.97 1.18 1.40 1.64

Inflation adjusted unit cost ($) 400 408 416.16 424.48 432.97

COGS ($ in millions) 312 397.16 491.53 595.90 711.15


Commission for Retailers 62.40 79.43 98.31 119.18 142.23

Commision for Sales People 7.80 9.93 12.29 14.90 17.78Marketing Expenses 70.2 89.36 110.59 134.08 160.01


Units of PC displays 1.2 1.38 1.59 1.83 2.10 2.41

Units of PC displays & iTV 2.16 2.56 3.01 3.50 4.06

Expansion cost ($, millions)

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5A/C Receivables 39 49.65 61.44 74.49 88.89

Inventory 31.20 39.72 49.15 59.59 71.11

A/C Payables 18.72 23.83 29.49 35.75 42.67


Table: Production Facilities and Costs (millio




Table: Marketing Expenses ($ in millions)


17/25


18/25


37.96 39.48 41.06 42.70 44.41

1.90 2.17 2.46 2.78 3.11

1104.08 1126.16 1148.69 1171.66 1195.09

2095.52 2445.22 2829.7 3251.89 3714.96


1.90 2.17 2.46 2.78 3.11

441.63 450.46 459.47 468.66 478.04

838.21 978.09 1131.88 1300.76 1485.98


167.64 195.62 226.38 260.15 297.20

20.96 24.45 28.30 32.52 37.15188.60 220.07 254.67 292.67 334.35


2.78 3.19 3.67 4.22 4.85

4.67 5.36 6.13 7.00 7.96

563.08

Year 6 Year 7 Year 8 Year 9 Year 10104.78 122.26 141.49 162.59 185.75

83.82 97.81 113.19 130.08 148.60

50.29 58.69 67.91 78.05 89.16

138.30 161.38 186.76 214.62 245.19

s)


19/25


Sales Revenue 0.00 780.00 1002.64 1253.04 1534.00 1848.63

COGS 0.00 312.00 401.06 501.21 613.60 739.45

Marketing Expenses 70.2 89.36 110.59 134.08 160.01G&A Expenses for iTV 57.75 60.64 63.67 66.85 70.20

Expansion cost

Advertising Expenses 126 132.3 138.92 145.86 153.15

Depreciation 220 220 220 220 220

Operating Income -5.95 99.29 218.64 353.61 505.82

Tax @ 40% -2.38 39.71 87.46 141.44 202.33

Net Income -3.57 59.57 131.19 212.17 303.49

Investments: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Investment in Assets -2200 0 0 0 0 0

Accumulated Depreciation 0 220 440 660 880 1100

of investment after depreciatio 2200 1980 1760 1540 1320 1100

Net Working Capital 0.00 51.48 66.17 82.70 101.24 122.01

Changes in net working capital 0 -51.48 -14.69 -16.53 -18.54 -20.77Total cashflows of investments -2200 -51.48 -14.69 -16.53 -18.54 -20.77


Sales Revenue 0.00 780.00 1002.64 1253.04 1534.00 1848.63

Operating Costs 0.00 565.95 683.36 814.39 960.39 1122.81

Taxes 0.00 -2.38 39.71 87.46 141.44 202.33

Cash flows from operations 0.00 216.43 279.57 351.19 432.17 523.49

Total cashflow of investment -2200 -51.48 -14.69 -16.53 -18.54 -20.77Total cash flow of project -2200 164.95 264.88 334.66 413.62 502.73


IRR 13.84%

Inflation (%) NPV & Changes

Increamental Cashflows for iTV (Millions of USD

Apple iTV

Income Statement (Million of USD)

Cashflows of iTV (Millions of USD)

Inflatio


20/25

2 780.25

3 189.36

I

3%

Inflation

0

200

400

600

800

1000

1200


21/25


2200.28 2356.94 2524.75 2704.51 2897.07 No. of TVs sold in USA (ml)

880.11 942.77 1009.90 1081.81 1158.83 Units sold by Apple (ml)

188.60 200.06 212.23 225.13 238.82 Inflation adjusted unit price ($)73.71 77.39 81.26 85.32 89.59 Sales Revenue ($ in millions)

597.03

160.81 168.85 177.29 186.16 195.47

220 220 220 220 220

80.03 747.86 824.07 906.09 994.37 Units sold by Apple (ml)

32.01 299.14 329.63 362.44 397.75

48.02 448.71 494.44 543.66 596.62 Inflation adjusted unit cost ($)

COGS ($ in millions)

Commission for Retailers

Commision for Sales People

Marketing Expenses


0 0 0 0 120

1320 1540 1760 1980 2200

880 660 440 220 0 Units of PC displays

145.22 155.56 166.63 178.50 191.21 Units of PC displays & iTV

-23.21 -10.34 -11.08 -11.86 -12.71 Expansion cost ($, millions)-23.21 -10.34 -11.08 -11.86 107.29

A/C Receivables

Year 6 Year 7 Year 8 Year 9 Year 10 Inventory

2200.28 2356.94 2524.75 2704.51 2897.07 A/C Payables

1900.25 1389.08 1480.68 1578.42 1682.71 Net Working Capital

32.01 299.14 329.63 362.44 397.75

268.02 668.71 714.44 763.66 816.62

-23.21 -10.34 -11.08 -11.86 107.29244.81 658.37 703.37 751.79 923.91

n vs. NPV


22/25

2%

nflation

780.25

189.36


23/25

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

30 31.2 32.45 33.75 35.10 36.50 37.96 39.48

0 0.78 0.97 1.18 1.40 1.64 1.90 1.97

1000 1030 1060.9 1092.727 1125.5088 1159.27407 1194.0523780 1002.64 1253.0366 1534.0032 1848.6273 2200.2773 2356.93704


0.78 0.97 1.18 1.40 1.64 1.90 1.97

400 412 424.36 437.09 450.20 463.71 477.62

312 401.06 501.21 613.60 739.45 880.11 942.77


62.40 80.21 100.24 122.72 147.89 176.02 188.55

7.80 10.03 12.53 15.34 18.49 22.00 23.57

70.2 90.24 112.77 138.06 166.38 198.02 212.12


1.2 1.38 1.59 1.83 2.10 2.41 2.78 3.19

2.16 2.56 3.01 3.50 4.06 4.67 5.17

597.03


39 50.13 62.65 76.70 92.43 110.01 117.85

31.20 40.11 50.12 61.36 73.95 88.01 94.28

18.72 24.06 30.07 36.82 44.37 52.81 56.57

51.48 66.17 82.70 101.24 122.01 145.22 155.56




Table: Marketing Expenses ($ in millions)

Table: Production Facilities and Costs (millions)


24/25


25/25

Year 8 Year 9 Year 10

41.06 42.70 44.41

2.05 2.13 2.22

1229.87387 1266.77008 1304.773182524.75096 2704.51323 2897.07


2.05 2.13 2.22

491.95 506.71 521.91

1009.90 1081.81 1158.83


201.98 216.36 231.77

25.25 27.05 28.97

227.23 243.41 260.74


3.67 4.22 4.85

5.72 6.36 7.08


126.24 135.23 144.85

100.99 108.18 115.88

60.59 64.91 69.53

166.63 178.50 191.21

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