ABC, Inc., has the following for its new project:

Price: $2,900 per unit

Variable cost: $350 per unit

Fixed cost: $5.9 mill

Quantity: 100,000 units

a) Suppose the company believes all of its estimates are accurate only to within 10%. What values should the company use for the four variables given here when it performs its best-case and worst-case scenario? (make table)

b) Calculate NPV for base, best and worst case scenario.

c) When doing a sensitivity analysis, calculate NPV if unit sales and fixed cost variables are changed in every scenario. What variable does the project most sensitive to?

SpaceW Corporation has estimated sales (in millions) for the next four quarters as follows :

	Q1	Q2	Q3	Q4
Sales	$570	$586	$559	$601

Sales for the first quarter of the year after this one are projected at $625 million. Accounts receivable at the beginning of the year were $188 million. SpaceW has a 30-day collection period. SpaceWs purchases from suppliers in a quarter are equal to 60% of the next quarters forecast sales, and suppliers are normally paid in 40 days. Wages, taxes and other expenses run about 30% of sales. Interest and dividends are $25 million per quarter. SpaceW Corporation plans to invest on capital expenditure in the second and fourth quarter of 80 million each. The company started the year with a $55 million cash balance and wishes to maintain a $38 million minimum balance.

Complete a cash budget for SpaceW by filling in the following:

SpaceW Corp., Cash Budget (in millions)
	Q1	Q2	Q3	Q4
Beginning cash balance	$55
Net cash inflow
Ending cash balance
Minimum Cash balance
Cumulative surplus (deficit)