Bloopers analysts have come up with the following revised estimates for its magnoosium mine:
| | Range |
| | Pessimistic | | Optimistic |
| Initial investment | + | 30 | % | | | 20 | % |
| Revenues | | 15 | % | | + | 15 | % |
| Variable costs | + | 20 | % | | | 20 | % |
| Fixed cost | + | 50 | % | | | 20 | % |
| Working capital | + | 20 | % | | | 20 | % |
| |
Conduct a sensitivity analysis for each variable and range and compute the NPV for each. Use Spreadsheet 10.1 and accompanying data as a starting point for the analysis. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Enter your answers in thousands round
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| | | | Project NPV | | | Pessimistic | Expected | Optimistic | | Initial investment | | | | | Revenues | | | | | Variable costs | | | | | Fixed costs | | | | | Working capital | | | | |
734 fo D G B A. Inputs initial investment ($ thousands) Salvage values thousands) Initial revenues is thousands) variable costs of revenues Initial fixed costs (5 thousands) Inflation rate Discount rate(%) iReceivables (of sales) Inventory of next year's costs) Tax rate() 1 15,000 2,000 15,000 40.0% 4,000 5.0% 12.0% 16.7% 15.0% 21.0% 1 1 1 1 2 64 Year: 0 1 5 2 15,000 in 1,580! 1,5801 - -15,000 1 B. Fixed assets investments in fixed assets Sales of fixed assets Cash flow from fixed assets 1 c. Operating cash flow Revenues I Variable expenses Fixed expenses Depreciation I Pretax profit 1 1 2 3 15,000 6,000 4,000 3,000 2,000 420 1,580 4,580 15,750 6,300 4,200 3,000 2,250 473 1,778 4,778 16,538 6,615 4,410 3,000 2,513 528 1,985 4,985 17,364 6,946 4,631 3,000 2,788 S86 2,203 5,203 18,233 7,293 4,862 3,000 3,078 646 2.431 5,431 1 1 1 U ir 1 3 3 U Profit after tax Operating cash flow 1 p. Working capital I Worldng capital Change in working capital Cash flow from investment in working capital 1 Project valuation Total project cash flow Discount factor PV of cash flow Net present value 1,500 1,500 -1,500 4,075 2,575 -2,575 0.408 4,279 204 -204 0.408 4,493 214 -214 0.408 4,717 225 -225 0.408 3,039 -1,679 1,679 0.250 0 3,039! 3,0391 3 + in -16,500 1.000 -16,500 1870.1 5 2,005 0.893 1,790 4,574 0.797 3,646 4,771 0.712 3,396 4,978 0.636 3,164 7,110 0.567 4,034 1 4,6191 0.5071 2,340 3 734 fo D G B A. Inputs initial investment ($ thousands) Salvage values thousands) Initial revenues is thousands) variable costs of revenues Initial fixed costs (5 thousands) Inflation rate Discount rate(%) iReceivables (of sales) Inventory of next year's costs) Tax rate() 1 15,000 2,000 15,000 40.0% 4,000 5.0% 12.0% 16.7% 15.0% 21.0% 1 1 1 1 2 64 Year: 0 1 5 2 15,000 in 1,580! 1,5801 - -15,000 1 B. Fixed assets investments in fixed assets Sales of fixed assets Cash flow from fixed assets 1 c. Operating cash flow Revenues I Variable expenses Fixed expenses Depreciation I Pretax profit 1 1 2 3 15,000 6,000 4,000 3,000 2,000 420 1,580 4,580 15,750 6,300 4,200 3,000 2,250 473 1,778 4,778 16,538 6,615 4,410 3,000 2,513 528 1,985 4,985 17,364 6,946 4,631 3,000 2,788 S86 2,203 5,203 18,233 7,293 4,862 3,000 3,078 646 2.431 5,431 1 1 1 U ir 1 3 3 U Profit after tax Operating cash flow 1 p. Working capital I Worldng capital Change in working capital Cash flow from investment in working capital 1 Project valuation Total project cash flow Discount factor PV of cash flow Net present value 1,500 1,500 -1,500 4,075 2,575 -2,575 0.408 4,279 204 -204 0.408 4,493 214 -214 0.408 4,717 225 -225 0.408 3,039 -1,679 1,679 0.250 0 3,039! 3,0391 3 + in -16,500 1.000 -16,500 1870.1 5 2,005 0.893 1,790 4,574 0.797 3,646 4,771 0.712 3,396 4,978 0.636 3,164 7,110 0.567 4,034 1 4,6191 0.5071 2,340 3
