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13 Strate cic Conslderations & KPb Investment sike, valuation, sensitivity analysis, what-if capabilties, Excel Data Table, cost structure, capital structure You are Excutive Vice President

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13 Strate cic Conslderations \& KPb Investment sike, valuation, sensitivity analysis, what-if capabilties, Excel Data Table, cost structure, capital structure You are Excutive Vice President of Operations of a company that produces and distributes household goods. Your company manufactures some of its products and purchases and reselis other products. Your company has been distributing brushes purchased from a third-party and you are analyzing the economics of insourcing (manufacturing internaly) the supply. These are the facts that you need to incorporate into a model: Your company has been spending $200,000 annually to purchase brushes. This expense will cease if supply of brushes is insourced. You estimate that manufacturing inhouse will cost $100,000 in labor and $10,000 in overhead. A sienificant investment in equipment will be required and the investment will be stright-line depreciated over a 5 year useful life (no residual value). Additional work needs to be done to firm up an estimate but you believe the equipment will cost between $200,000 and $350,000. The Treasurer of your company needs to decide how the investment would be financed and has asked you to andlrae the sensitivity of the return to financing options. At the end of the previous year, 2022, your company had $200,000 in Cash, 2ero debt, and $100,000 in Equity on its Halance Shet. For the purpose of developing the model, you have seiected some initial values for the two independent variables. \begin{tabular}{l} Investment Required \\ Percent Debt Financed \\ \hline \end{tabular} The Excel Data Table functionalify permits users to identify a set of potential value for two independent variables. The functionality automatically analyres a formuta that is dependent on these two variables and presents the results of all combinations of the two independent variables. The 'DXCIL. Financial Functions' Sheet presents how to create a Data Table, but, the output is presented here for those that do not want to dive any deeper

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