Answered step by step
Verified Expert Solution
Question
1 Approved Answer
1. Asnwer the following questions based on the graph a) assume discount rate of 15%. What is the overall NPV. Should the company move on
1. Asnwer the following questions based on the graph a) assume discount rate of 15%. What is the overall NPV. Should the company move on with the project? Explain. b) Do the same with 30% c) Assume the recurring value of the benefits due to increased sales was overly optimistic and net income due to increased sales is only $500,000 instead of $1,000,000. Assuming a discount rate of 15%, what is the overall net present value for the project? Should SSB move forward with the project and proceed with implementing SAP? Explain your answer. d) do the same with 30% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% $500,000 $4,375,000.00 $3,397,776.48 $2,550,716.67 $1,813,737.43 $1,170,163.17 $606,105.17 $109,960.61 ($327,992.88) ($715,926.30) ($1,060,727.17) ($1,368.218.14) ($1,643,335.94) ($1,890,278.19) ($2,112,624.21) ($2,313,434.72) ($2,495,334.26) ($2,660,579.55) ($2,811.116.33) ($2,948,626.75) ($3,074,568.93) ($3.190,210.13) $600,000 $700,000 $800,000 $6,375,000 $8,375,000.00 $10,375,000.00 $5,202.332 $7,006,887.08 $8,811,442.37 $4,185,860 $5,821,003.34 $7,456.146.68 $3,301,485 $4,789,232.40 $6,276,979.89 $2,529,196 $3,888,228.44 $5,247,261.08 $1,852.326 $3,098,547.24 $4,344,768.27 $1,256,953 $2,403,944.85 $3,550,936.97 $731,409 $1,790,809.97 $2,850,211.40 $265,888 $1,247,703.19 $2,229,517.93 ($147.873) $764,981.97 $1,677,836.54 ($516,862) $334,494.60 $1,185,850.98 ($847,003) ($50,670.32) $745,662.49 ($1,143,334) ($396,389.46) $350,554.90 ($1,410,149) ($707,673.90) ($5,198.74) ($1,651.122) ($988,808.61) ($326,495.56) ($1,869,401) ($1,243.467.97) ($617.534.82) ($2,067.695) ($1,474,811.37) (5881,927.28) ($2,248,340) ($1,685,562.86) ($1,122,786.13) ($2,413,352) ($1,878,077.45) ($1,342,802.80) ($2,564,483) ($2,054,396.50) ($1,544,310.29) ($2,703,252) ($2,216,294.19) ($1,729,336.21) $900,000 $12.375,000 $10,615,998 $9,091,290 $7,764,727 $6,606,294 $5,590,989 $4,697,929 $3,909,613 $3,211,333 $2,590,691 $2,037,207 $1,541,995 $1,097,499 $697,276 $335,817 $8,398 ($289,043) ($560,009) ($807.528) ($1,034,224) ($1,242.378) M DOO DOO 9998 290 727 294 989 9929 613 333 691 207 995 499 276 817 398 043) 009) 528) 224) 378) $1,000,000 $14,375,000.00 $12,420,552.97 $10,726,433.34 $9,252,474.86 $7,965,326,34 $6,837,210.34 $5,844,921.22 $4,969,014.25 $4,193,147.41 $3,503,545.67 $2,888,563.72 $2,338,328.12 $1,844,443.62 $1,399,751.58 $998,130.55 $634,331.47 $303,840.90 $2,767.34 ($272,253.50) ($524,137.86) ($755,420.27) $1,100,000 $16,375,000.00 $14,225,108.26 $12,361,576.68 $10,740,222.35 $9,324,358.98 $8,083,431.38 $6,991,913.34 $6,028,415.67 $5,174,962.15 $4,416,400.24 $3,739,920.09 $3,134,660.93 $2,591,387.99 $2,102,226.74 $1,660,443.61 $1,260,264.62 $896,724.99 $565,544.07 $263,021.15 ($14,051.65) ($268,462.29) $1,200,000 $1,300,000 $1,400,000 $18,375,000 $20,375,000.00 $22,375,000.00 $16,029,664 $17,834,218.86 $19,638,774.15 $13,996,720 $15,631,863.35 $17,267,006.68 $12,227,970 $13,715,717.32 $15,203,464.80 $10,683,392 $12,042,424.25 $13,401,456.88 $9,329,652 $10,575,873.45 $11,822,094.48 $8,138,905 $9,285,897.58 $10,432,889.71 $7,087,817 $8,147,218.52 $9,206,619.94 $6,156,777 $7,138,591.63 $8,120,406.37 $5,329,255 $6,242, 109.37 $7,154,963.94 $4,591,276 $5,442,632.84 $6,293,989.21 $3,930,994 $4,727,326.55 $5,523,659.36 $3,338,332 $4,085,276.71 $4,832,221.07 $2,804,702 $3,507,177.05 $4,209,652.21 $2,322,757 $2,985,069.72 $3,647,382.77 $1,886,198 $2,512,130.92 $3,138,064.06 $1,489,609 $2,082,493.17 $2,675,377.26 $1,128,321 $1,691,097.54 $2,253,874.27 $798,296 $1,333,570.45 $1,868,845.10 $196,035 $1,006,120.78 $1,516,206.99 $218,496 $705,453.65 $1,192,411.63 $1,500,000 $24,375,000 $21,443,329 $18,902,150 $16,691,212 $14,760,490 $13,068,316 $11,579,882 $10,266,021 $9,102,221 $8,067,819 $7,145,346 $6,319,992 $5,579,165 $4,912,127 $4,309,696 $3,763,997 $3,268,261 $2,816,651 $2,404,120 $2,026,293 $1,679,370 $38 $34 $3c .000 000 329 150 212 490 316 882 021 221 819 346 992 165 127 696 997 261 651 120 293 370 $1,600,000 $1,700,000 $1,800,000 $1,900,000 $2,000,000 $26,375,000.00 $28,375,000.00 $30,375,000 $32,375,000.00 $34,375,000.00 $23,247,884.75 $25,052,440.04 $26,856,995 $28,661,550.64 $30,466,105.93 $20,537,293.35 $22,172,436.69 $23,807,580 $25,442,723.35 $27,077,866.69 $18,178,959.78 $19,666,707.26 $21,154,455 $22,642,202.23 $24,129,949.72 $16,119,522.15 $17,478,554.79 $18,837,587 $20,196,620.06 $21,555,652.69 $14,314,536.55 $15,560,757.58 $16,806,979 $18,053,199.65 $19,299,420.69 $12,726,873.95 $13,873,866.07 $15,020,858 $16,167,850.32 $17,314,842.44 $11,325,422.79 $12,384,824.22 $13,444,226 $14,503,627.07 $15,563,028.49 $10,084,035.85 $11,065,850.59 $12,047,665 $13,029,480.07 $14,011,294.81 $8,980,673.07 $9,893,527.64 $10,806,382 $11,719,236.77 $12,632,091.34 $7,996,701.95 $8,848,058.32 $9,699,415 $10,550,771.07 $11,402,127.44 $7,116,324.99 $7,912,657.80 $8,708,991 $9,505,323.42 $10,301,656.23 $6,326,109.80 $7,073,054.16 $7,819,999 $8,566,942.89 $9,313,887.25 $5,614,602.52 $6,317,077.68 $7,019,553 $7,722,028.00 $8,424,503.16 $4,972,008.88 $5,634,321.94 $6,296,635 $6,958,948.05 $7,621,261.10 $4,389,930.36 $5,015,863.51 $5,641,797 $6,267,729.80 $6,893,662.95 $3,861,145.44 $4,454,029.53 $5,046,914 $5,639,797.71 $6,232,681.80 $3,379,427.74 $3,942,204.47 $4,504,981 $5,067,757.94 $5,630,534.67 $2,939,394.40 $3,474,669.05 $4,009,944 $4,545,218.34 $5,080,492.99 $2,536,379.42 $3,046,465.63 $3,556,552 $4,066,638.06 $4,576,724.27 $2,166,327.57 $2,653,285,55 $3,140,244 $3,627,201.49 $4,114,159.47 Economic Feasibility Sensitivitu. Anak $2,100,000 $36,375,000 $32,270,661 $28,713,010 $25,617,697 $22,914,685 $20,545,642 $18,461,835 $16,622,430 $14,993,110 $13,544,946 $12,253,484 $11,097,989 $10,060,832 $9,126,978 $8,283,574 $7,519,596 $6,825,566 $6,193,311 $5,615,768 $5,086,810 $4,601,117 $27 $24 $21 $19. $17 $15, $14, $13, $11, $10,8 $9,8 $8,9 $8,1 $7,4 $6,7 $6,1 $5,59 $5,08 000,000 5,000.00 -,105.93 ,866.69 ,949.72 ,652.69 420.69 842.44 _028.49 .294.81 091.34 127.44 656.23 887.25 503.16 261.10 662.95 681.80 534.67 192.99 724.27 159.47 easibility $2,100,000 $2,200,000 $2,300,000 $36,375,000 $38,375,000.00 $40,375,000.00 $32,270,661 $34,075,216.53 $35,879,771.82 $28,713,010 $30,348,153.36 $31,983,296.69 $25,617,697 $27,105,444.69 $28,593,192.18 $22,914,685 $24,273,717.96 $25,632,750.59 $20,545,642 $21,791,862.75 $23,038,083.79 $18,461,835 $19,608,826.68 $20,755,818.80 $16,622,430 $17,681,831.34 $18,741,232.76 $14,993,110 $15,974,924.30 $16,956,739.04 $13,544,946 $14,457,800.47 $15,370,655.04 $12,253,484 $13,104,840.18 $13,956,196.56 $11,097,989 $11,894,321.86 $12,690,654.67 $10,060,832 $10,807,775.97 $11,554,720.34 $9,126,978 $9,829,453.47 $10,531,928.63 $8,283,574 $8,945,887.21 $9,608,200.27 $7,519,596 $8,145,529.24 $8,771,462.39 $6,825,566 $7,418,449.98 $8,011,334.07 $6,193,311 $6,756,088.14 $7,318,864.87 $5,615,768 $6,151,042.29 $6,686,316.94 $5,086,810 $5,596,896.70 $6,106,982.91 $4,601,117 $5,088,075.41 $5,575,033.39 Sensitivitu. Annlinin $2,400,000 $2,500,000 $42,375,000 $44,375,000.00 $37,684,327 $39,488,882.42 $33,618,440 $35,253,583.36 $30,080,940 $31,568,687.15 $26,991,783 $28,350,815.86 $24,284,305 $25,530,525.86 $21,902,811 $227949,803.05 $19,800,634 $20,860,035.61 $17,938,554 $18,920,368.52 $16,283,510 $17,196,364.17 $14,807,553 $15,658,909.30 $13,486,987 $14,283,320.29 $12,301,665 $13,048,609.06 $11,234,404 $11,936,878.95 $10,270,513 $10,932,826.38 $9,397,396 $10,023,328.68 $8,604,218 $9,197,102.25 $7,881,642 $8,444,418.34 $7,221,592 $7,756,866.24 $6,617,069 $7,127,155.34 $6,061,991 $6,548,949.33 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% $500,000 $4,375,000.00 $3,397,776.48 $2,550,716.67 $1,813,737.43 $1,170,163.17 $606,105.17 $109,960.61 ($327,992.88) ($715,926.30) ($1,060,727.17) ($1,368.218.14) ($1,643,335.94) ($1,890,278.19) ($2,112,624.21) ($2,313,434.72) ($2,495,334.26) ($2,660,579.55) ($2,811.116.33) ($2,948,626.75) ($3,074,568.93) ($3.190,210.13) $600,000 $700,000 $800,000 $6,375,000 $8,375,000.00 $10,375,000.00 $5,202.332 $7,006,887.08 $8,811,442.37 $4,185,860 $5,821,003.34 $7,456.146.68 $3,301,485 $4,789,232.40 $6,276,979.89 $2,529,196 $3,888,228.44 $5,247,261.08 $1,852.326 $3,098,547.24 $4,344,768.27 $1,256,953 $2,403,944.85 $3,550,936.97 $731,409 $1,790,809.97 $2,850,211.40 $265,888 $1,247,703.19 $2,229,517.93 ($147.873) $764,981.97 $1,677,836.54 ($516,862) $334,494.60 $1,185,850.98 ($847,003) ($50,670.32) $745,662.49 ($1,143,334) ($396,389.46) $350,554.90 ($1,410,149) ($707,673.90) ($5,198.74) ($1,651.122) ($988,808.61) ($326,495.56) ($1,869,401) ($1,243.467.97) ($617.534.82) ($2,067.695) ($1,474,811.37) (5881,927.28) ($2,248,340) ($1,685,562.86) ($1,122,786.13) ($2,413,352) ($1,878,077.45) ($1,342,802.80) ($2,564,483) ($2,054,396.50) ($1,544,310.29) ($2,703,252) ($2,216,294.19) ($1,729,336.21) $900,000 $12.375,000 $10,615,998 $9,091,290 $7,764,727 $6,606,294 $5,590,989 $4,697,929 $3,909,613 $3,211,333 $2,590,691 $2,037,207 $1,541,995 $1,097,499 $697,276 $335,817 $8,398 ($289,043) ($560,009) ($807.528) ($1,034,224) ($1,242.378) M DOO DOO 9998 290 727 294 989 9929 613 333 691 207 995 499 276 817 398 043) 009) 528) 224) 378) $1,000,000 $14,375,000.00 $12,420,552.97 $10,726,433.34 $9,252,474.86 $7,965,326,34 $6,837,210.34 $5,844,921.22 $4,969,014.25 $4,193,147.41 $3,503,545.67 $2,888,563.72 $2,338,328.12 $1,844,443.62 $1,399,751.58 $998,130.55 $634,331.47 $303,840.90 $2,767.34 ($272,253.50) ($524,137.86) ($755,420.27) $1,100,000 $16,375,000.00 $14,225,108.26 $12,361,576.68 $10,740,222.35 $9,324,358.98 $8,083,431.38 $6,991,913.34 $6,028,415.67 $5,174,962.15 $4,416,400.24 $3,739,920.09 $3,134,660.93 $2,591,387.99 $2,102,226.74 $1,660,443.61 $1,260,264.62 $896,724.99 $565,544.07 $263,021.15 ($14,051.65) ($268,462.29) $1,200,000 $1,300,000 $1,400,000 $18,375,000 $20,375,000.00 $22,375,000.00 $16,029,664 $17,834,218.86 $19,638,774.15 $13,996,720 $15,631,863.35 $17,267,006.68 $12,227,970 $13,715,717.32 $15,203,464.80 $10,683,392 $12,042,424.25 $13,401,456.88 $9,329,652 $10,575,873.45 $11,822,094.48 $8,138,905 $9,285,897.58 $10,432,889.71 $7,087,817 $8,147,218.52 $9,206,619.94 $6,156,777 $7,138,591.63 $8,120,406.37 $5,329,255 $6,242, 109.37 $7,154,963.94 $4,591,276 $5,442,632.84 $6,293,989.21 $3,930,994 $4,727,326.55 $5,523,659.36 $3,338,332 $4,085,276.71 $4,832,221.07 $2,804,702 $3,507,177.05 $4,209,652.21 $2,322,757 $2,985,069.72 $3,647,382.77 $1,886,198 $2,512,130.92 $3,138,064.06 $1,489,609 $2,082,493.17 $2,675,377.26 $1,128,321 $1,691,097.54 $2,253,874.27 $798,296 $1,333,570.45 $1,868,845.10 $196,035 $1,006,120.78 $1,516,206.99 $218,496 $705,453.65 $1,192,411.63 $1,500,000 $24,375,000 $21,443,329 $18,902,150 $16,691,212 $14,760,490 $13,068,316 $11,579,882 $10,266,021 $9,102,221 $8,067,819 $7,145,346 $6,319,992 $5,579,165 $4,912,127 $4,309,696 $3,763,997 $3,268,261 $2,816,651 $2,404,120 $2,026,293 $1,679,370 $38 $34 $3c .000 000 329 150 212 490 316 882 021 221 819 346 992 165 127 696 997 261 651 120 293 370 $1,600,000 $1,700,000 $1,800,000 $1,900,000 $2,000,000 $26,375,000.00 $28,375,000.00 $30,375,000 $32,375,000.00 $34,375,000.00 $23,247,884.75 $25,052,440.04 $26,856,995 $28,661,550.64 $30,466,105.93 $20,537,293.35 $22,172,436.69 $23,807,580 $25,442,723.35 $27,077,866.69 $18,178,959.78 $19,666,707.26 $21,154,455 $22,642,202.23 $24,129,949.72 $16,119,522.15 $17,478,554.79 $18,837,587 $20,196,620.06 $21,555,652.69 $14,314,536.55 $15,560,757.58 $16,806,979 $18,053,199.65 $19,299,420.69 $12,726,873.95 $13,873,866.07 $15,020,858 $16,167,850.32 $17,314,842.44 $11,325,422.79 $12,384,824.22 $13,444,226 $14,503,627.07 $15,563,028.49 $10,084,035.85 $11,065,850.59 $12,047,665 $13,029,480.07 $14,011,294.81 $8,980,673.07 $9,893,527.64 $10,806,382 $11,719,236.77 $12,632,091.34 $7,996,701.95 $8,848,058.32 $9,699,415 $10,550,771.07 $11,402,127.44 $7,116,324.99 $7,912,657.80 $8,708,991 $9,505,323.42 $10,301,656.23 $6,326,109.80 $7,073,054.16 $7,819,999 $8,566,942.89 $9,313,887.25 $5,614,602.52 $6,317,077.68 $7,019,553 $7,722,028.00 $8,424,503.16 $4,972,008.88 $5,634,321.94 $6,296,635 $6,958,948.05 $7,621,261.10 $4,389,930.36 $5,015,863.51 $5,641,797 $6,267,729.80 $6,893,662.95 $3,861,145.44 $4,454,029.53 $5,046,914 $5,639,797.71 $6,232,681.80 $3,379,427.74 $3,942,204.47 $4,504,981 $5,067,757.94 $5,630,534.67 $2,939,394.40 $3,474,669.05 $4,009,944 $4,545,218.34 $5,080,492.99 $2,536,379.42 $3,046,465.63 $3,556,552 $4,066,638.06 $4,576,724.27 $2,166,327.57 $2,653,285,55 $3,140,244 $3,627,201.49 $4,114,159.47 Economic Feasibility Sensitivitu. Anak $2,100,000 $36,375,000 $32,270,661 $28,713,010 $25,617,697 $22,914,685 $20,545,642 $18,461,835 $16,622,430 $14,993,110 $13,544,946 $12,253,484 $11,097,989 $10,060,832 $9,126,978 $8,283,574 $7,519,596 $6,825,566 $6,193,311 $5,615,768 $5,086,810 $4,601,117 $27 $24 $21 $19. $17 $15, $14, $13, $11, $10,8 $9,8 $8,9 $8,1 $7,4 $6,7 $6,1 $5,59 $5,08 000,000 5,000.00 -,105.93 ,866.69 ,949.72 ,652.69 420.69 842.44 _028.49 .294.81 091.34 127.44 656.23 887.25 503.16 261.10 662.95 681.80 534.67 192.99 724.27 159.47 easibility $2,100,000 $2,200,000 $2,300,000 $36,375,000 $38,375,000.00 $40,375,000.00 $32,270,661 $34,075,216.53 $35,879,771.82 $28,713,010 $30,348,153.36 $31,983,296.69 $25,617,697 $27,105,444.69 $28,593,192.18 $22,914,685 $24,273,717.96 $25,632,750.59 $20,545,642 $21,791,862.75 $23,038,083.79 $18,461,835 $19,608,826.68 $20,755,818.80 $16,622,430 $17,681,831.34 $18,741,232.76 $14,993,110 $15,974,924.30 $16,956,739.04 $13,544,946 $14,457,800.47 $15,370,655.04 $12,253,484 $13,104,840.18 $13,956,196.56 $11,097,989 $11,894,321.86 $12,690,654.67 $10,060,832 $10,807,775.97 $11,554,720.34 $9,126,978 $9,829,453.47 $10,531,928.63 $8,283,574 $8,945,887.21 $9,608,200.27 $7,519,596 $8,145,529.24 $8,771,462.39 $6,825,566 $7,418,449.98 $8,011,334.07 $6,193,311 $6,756,088.14 $7,318,864.87 $5,615,768 $6,151,042.29 $6,686,316.94 $5,086,810 $5,596,896.70 $6,106,982.91 $4,601,117 $5,088,075.41 $5,575,033.39 Sensitivitu. Annlinin $2,400,000 $2,500,000 $42,375,000 $44,375,000.00 $37,684,327 $39,488,882.42 $33,618,440 $35,253,583.36 $30,080,940 $31,568,687.15 $26,991,783 $28,350,815.86 $24,284,305 $25,530,525.86 $21,902,811 $227949,803.05 $19,800,634 $20,860,035.61 $17,938,554 $18,920,368.52 $16,283,510 $17,196,364.17 $14,807,553 $15,658,909.30 $13,486,987 $14,283,320.29 $12,301,665 $13,048,609.06 $11,234,404 $11,936,878.95 $10,270,513 $10,932,826.38 $9,397,396 $10,023,328.68 $8,604,218 $9,197,102.25 $7,881,642 $8,444,418.34 $7,221,592 $7,756,866.24 $6,617,069 $7,127,155.34 $6,061,991 $6,548,949.33
1. Asnwer the following questions based on the graph
a) assume discount rate of 15%. What is the overall NPV. Should the company move on with the project? Explain.
b) Do the same with 30%
c) Assume the recurring value of the benefits due to increased sales was overly optimistic and net income due to increased sales is only $500,000 instead of $1,000,000. Assuming a discount rate of 15%, what is the overall net present value for the project? Should SSB move forward with the project and proceed with implementing SAP? Explain your answer.
d) do the same with 30%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started