Pontrelli Recycling

1776 Words8 Pages
Pontrelli Recycling
Sara Doyle, Kevin Jackson, and Ali Lakhani
FIN/575
Michael Plesko
January 20, 2014

Pontrelli Recycling
Pontrelli Recycling, Inc. has a mission to “increase the efficiency of recycling usable materials in order to create a better environment for all,” and to “create value and a fair return on investment for shareholders” (Callahan, Stetz, and Brooks, 2007). A project must always be aligned with the company’s strategy and financial goals. When devising any new project, a company can refer to many available resources for the information needed for the plan by reviewing financial sheets and documents. In the upcoming project for Pontrelli Recycling the high level cost estimate for the project is $8.8 million. In
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WACC is used to value the entire firm, it used as a starting point to determine the discount rate for project investments. In addition, the WACC is the appropriate rate to use when evaluating the firm performance to determine if the firm has created value for its shareholders.
Project Viability

To calculate the cash flows for the project a cash flow statement has to be created for Pontrelli Recycling Inc. The cash flow statement shows the projected cash flows for Pontrelli Recycling Inc. project (Callahan, Stetz, & Brooks, 2007):
Cash Flow Statement

2007
2008
2009
2010
Net Income
2,205,535
3,413,387
5,296,138
8,532,792
Depreciation and Amortization
(7,500,000)
0
0
0
Acct. Receivable
(86,406)
(90,726)
(95,263)
(100,026)
Inventory
60,759
63,580
66,767
70,105
Prepaid Expenses
0
0
0
0
Acct. Payable
27,265
29,991
49,485
56,908
Taxes Payable
31,402
66,332
103,404
177,682
Customer Deposit
0
0
0
0
Net Cash Flow Provided by Operating Activities
(5,261,798)
3,455,564
5420531
8737461
Net Property, Plant, and Equipment
0
0
0
0
Other Assets
(19,791)
(21,769)
(35,920)
(41,308)
Net Cash Flow Provided by Investing Activities
(19,791)
(21,769)
(35,920)
(41,308)
Borrowings

7,522,016
(839,806)
(752,358)
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