PATIncome Statement Forecast for 2006-2010 (all figures in $)References(When Mountain Man produces only the Lager Beer)200520062007200820092010Revenues5044000049,431,20048,442,57647,473,72446,524,25045,593,765Exhibit 1 Page 8. 2006 onwards 2% decrease in revenue per yearCOGS3480360034,107,52833,425,37732,756,87032,101,73231,459,698Assuming 69% of revenue is COGS (66.93/97=0.69) pg8, Exhibit 1Gross Margin156364001532367215017198.5614716854.588814422517.49702414134067.1470835Gross Margin = Revenues - COGSSG&A Non Adv8,221,7208,221,7208,221,7208,221,7208,221,7208,221,720Given non adv SG&A remain constantSG&A Adv1,361,8801,334,6421,307,9501,281,7911,256,1551,231,032Assuming 2.7% of revenue - pg8, Exhibit 1Other Expenses14123201384073.61356392.1281329264.285441302678.99973121276625.41973658Assuming 2.8% of revenue - pg8, Exhibit 1Operating Margin4,640,4804,383,2364,131,1373,884,0803,641,9643,404,690Operating Margin = Gross Margin - SG&A - Other ExpensesOther Income151,320148,294145,328142,421139,573136,781Assuming 0.3% of revenue - pg8, Exhibit 1PBT4,791,8004,531,5304,276,4654,026,5013,781,5363,541,471PBT = Operating Margin + Other IncomeIncome Tax16771301586035.361496762.61281409275.3205441323537.774133121239514.97865046Assuming 35% of PBT (2005 Data of Exhibit1 page8)PAT3,114,6702,945,4942,779,7022,617,2262,457,9992,301,956PAT = PBT - Income TaxProfit Percentage6.185.965.745.515.285.05(PAT*100)/Revenue(When Mountain Man produces only the Light Beer)Selling Price/lager beer979797979797Revenues = 50440000 (Exhibit 1), Volume = 520,000 (pg2.para3), SP = Revenue/VolumeBase Market Share46860.7618744303 Exhibit 5A Page 10 and Base mkt share = .25% (Page7, para2 line6)Market Increase4.00%4.00%4.00%4.00%4.00%Page7 para2 line5Total Market Revenue of Light18744303.0019494075.1220273838.1221084791.6521928183.3222805310.65Mkt Share Increase0.25%0.50%0.75%1.00%1.25%Page7 para2 line6. Also Increasing @ 0.25% every yearSales of Light Beer048,735101,369158,136219,282285,0664% . 2006 onwards mkt grows at 4%. Product growth increases at .25%.Revenues Total (Light)04,727,3139,832,81115,339,18621,270,33827,651,439Revenue= Sales Volume * SPIncome Statement Forecast for 2006-2010 (all figures in $)200520062007200820092010Revenues04,727,3139,832,81115,339,18621,270,33827,651,439As Calculated above in RevenuesTotalCOGS03,488,7577,256,61511,320,31915,697,50920,406,762Assuming 73.8% COGS (as % revenue): (66.93+4.69)/97 = 0.738Gross Margin01,238,5562,576,1974,018,8675,572,8297,244,677Gross Margin = Revenues - COGSSG&A Non Adv0900,000900,000900,000900,000900,000Fixed Non SG&A of 900000 - pg6 para4SG&A Adv0750,000265,486414,158574,299746,589Adv. Expense of 2.7% of revenue after first year. 1st year = 750000 - pg6 para 4Other Expenses132,365275,319429,497595,569774,240Exhibit1 Page8 (2.8% of Revenue)Operating Margin0-543,8091,135,3922,275,2113,502,9604,823,848Operating Margin = Gross Margin - SG&A - Other ExpensesPBT0-529,6271,164,8902,321,2293,566,7714,906,802PBT = Operating Margin +Other IncomeIncome Tax00407711.64812430.171248369.831717380.78Assuming 35% of PBTPAT0-529,627757,1791,508,7992,318,4013,189,421PAT = PBT - Income TaxProfit Margin0-11.207.709.8410.9011.53(PAT*100)/RevenueIncome Statement Forecast for 2006-2010 (all figures in $) after considering cannibalisation of lager in first year (12.5%)After considering cannibalisation of lager in first year (12.5%)Revenue from Light4727313.229832811.4915339185.9321270337.8227651439.16From Revenue of Only Ligh Case AboveRevenue from Lager without canb50440000.0049431200.0048442576.0047473724.4846524249.9945593764.99From Revenue of Only Lager Case AboveCannibalization12.50%10.00%8.00%6.00%5.00%Page6 para3 line5 (5+20)/2=12.5%. Then assuming lesser cannib in further yearsRevenue from Lager WITH canb50440000.0047979613.2253431129.8959015012.4565003132.8170965515.90Rev from Lager * (100 - Canb. Rate)200520062007200820092010Total Revenues50,440,00047,979,61353,431,13059,015,01265,003,13370,965,516Assuming 2% decrease in revenue per year; 2006 cannibalisatino of 12.5%. Cannibalization Rate reduced each year.COGS34,803,60033,105,93336,867,48040,720,35944,852,16248,966,206Assuming 69% of revenue is COGS (66.93/97=0.69) pg8, Exhibit 1Gross Margin15,636,40014,873,68016,563,65018,294,65420,150,97121,999,310Gross Margin = Revenues - COGSSG&A Non Adv8,221,7209,121,7209,121,7209,121,7209,121,7209,121,720Given non adv SG&A remain constantSG&A Adv1,361,8801,295,4501,442,6411,593,4051,755,0851,916,069Assuming 2.7% of revenue - pg8, Exhibit 1Other Expenses14123201343429.17006481496071.636934781652420.348511061820087.718604011987034.44526344Assuming 2.8% of revenue - pg8, Exhibit 1Operating Margin4,640,4803,113,0814,503,2185,927,1087,454,0798,974,487Operating Margin = Gross Margin - SG&A - Other ExpensesOther Income151,320143,939160,293177,045195,009212,897Assuming 0.3% of revenue - pg8, Exhibit 1PBT4,791,8003,257,0204,663,5126,104,1537,649,0889,187,383PBT = Operating Margin +Other IncomeIncome Tax16771301139957.073458981632229.029114682136453.623948182677180.892497943215584.08597459Assuming 35% of PBTPAT3,114,6702,117,0633,031,2823,967,7004,971,9075,971,799PAT = PBT - Income TaxProfit Percentage6.184.415.676.727.658.42Total Revenue50,440,00047,979,61353,431,13059,015,01265,003,13370,965,516Total PAT (Light +Lager)3,114,6702,117,0633,031,2823,967,7004,971,9075,971,799Total Profit Percentage6.184.415.676.727.658.42200520062007200820092010PAT(Lager only)3,114,6702,945,4942,779,7022,617,2262,457,9992,301,956PAT(Light only)0-529,627757,1791,508,7992,318,4013,189,421PAT(Combination)3,114,6702,117,0633,031,2823,967,7004,971,9075,971,799

PAT

PAT(Lager only)PAT(Light only)PAT(Combination)

BreakEvenBreakeven analysis (No Cannibalization)Assumption: price is same for Light and lager (page 6, para 4, line 11 )Fixed cost$ReferencesAdvertising750000Line 8, Para 4, Page 6,SG&A900000Line 9, para 4, page 6Total fixed cost1650000Variable cost/barrelVariable cost66.93Line 12, para 4, page 6Additional VC4.699Line 12, para 4, page 6Total variable cost/barrel71.629price/barrel97Net Revenue (Exhibit 1)/ 520000 (line2, para3, page2)Breakeven (no. of light barrels)65034.88TFC/(SP-TVC)DemandNo of barrels of Light150,104=SUM(PAT!C24:D24) Sum of sales volumes of 2005 & 2006As Breakeven barrels is less than the demand, it can be conculded that the Light beer will be able to recover its fixed costs within two years which was consistent with the company's expectations

NPVCash flowYearReferenceRate(r )0.12Footnote 6, Page 712%Annual Discount rateFootnote 6, Page 7Year(Y)Discount factor (D)PV = D*Y-1,650,000Initial InvestmentLine 8 &9, Para 4, Page 601-16500003,114,670Cash flow from Year 1PAT from Combination 200510.89285714292780955.35714286D = 1 / (1.12)^YP = D * Y2,117,063Cash flow from Year 2PAT from Combination 200620.79719387761687709.770746033,031,282Cash flow from Year 3PAT from Combination 200730.71178024782157606.996687053,967,700Cash flow from Year 4PAT from Combination 200840.63551807842521544.817429094,971,907Cash flow from Year 5PAT from Combination 200950.56742685572821193.766894325,971,799Cash flow from Year 6PAT from Combination 201060.50663112123025499.23133205$13,344,509.94=A4+NPV(A3,A5,A6,A7,A8,A9,A10)NPV13344509.9402314Formula for NPV