Bloopers analysts have come up with the following revised estimates for its magnoosium mine:

	Range
	Pessimistic				Optimistic
Initial investment	+	40	%			20	%
Revenues		25	%		+	25	%
Variable costs	+	20	%			25	%
Fixed cost	+	20	%			30	%
Working capital	+	40	%			45	%

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 rounded to the nearest whole dollar.)

	A. Inputs
	Initial investment ($ thousands)	10,000
	Salvage value ($ thousands)	2,000
	Initial revenues ($ thousands)	15,000
	Variable costs (% of revenues)	40.0%
	Initial fixed costs ($ thousands)	4,000
	Inflation rate (%)	5.0%
	Discount rate (%)	12.0%
	Receivables (% of sales)	16.7%
	Inventory (% of next year's costs)	15.0%
	Tax rate (%)	21.0%
	Year:	0	1	2	3	4	5	6
	B. Fixed assets
	Investments in fixed assets	10,000
	Sales of fixed assets							1,580
	Cash flow from fixed assets	-10,000						1,580
	C. Operating cash flow
	Revenues		15,000	15,750	16,538	17,364	18,233
	Variable expenses		6,000	6,300	6,615	6,946	7,293
	Fixed expenses		4,000	4,200	4,410	4,631	4,862
	Depreciation		2,000	2,000	2,000	2,000	2,000
	Pretax profit		3,000	3,250	3,513	3,788	4,078
	Tax		630	683	738	796	856
	Profit after tax		2,370	2,568	2,775	2,993	3,221
	Operating cash flow		4,370	4,568	4,775	4,993	5,221
	D. Working capital
	Working capital	1,500	4,075	4,279	4,493	4,717	3,039	0
	Change in working capital	1,500	2,575	204	214	225	-1,679	-3,039
	Cash flow from investment in working capital	-1,500	-2,575	-204	-214	-225	1,679	3,039
			0.408	0.408	0.408	0.408	0.250
	E. Project valuation
	Total project cash flow	-11,500	1,795	4,364	4,561	4,768	6,900	4,619
	Discount factor	1.000	0.893	0.797	0.712	0.636	0.567	0.507
	PV of cash flow	-11,500	1,603	3,479	3,246	3,030	3,915	2,340
	Net present value	6,113.1

	Project NPV
	Pessimistic	Expected	Optimistic
Initial investment
Revenues
Variable costs
Fixed costs
Working capital

AutoSave OFF OFF AGE 5 Spreadsheet 101 - Saved to my Mac Home Insert Draw Page Layout Formulas Data Review View Acrobat Tell me Share Comments X [G Calibri (Body) v 11 v AP General Insert I Delete 28-03 v Paste B 1 I U 7 ar Ar = = = Y ideas Conditional Format Formatting as Table Styles Formato Sort & Filter Find & Select Create and Share Adobe PDF M15 X fx B D E F G H . L M N P R 5 UJ W 1 2 4 5 A. Inputs Initial investment is thousands) Salvage value (s thousands Initial revenues is thousands Variablecosis of revenues Initial fined costs $thousands Inflation rate) Discount rate Receivables at sales Inventory of next year's costs! Tax The 10,000 2,000 15,000 100% %, 4,000 5.0% 12 0% %, 16.7% 15.0% 210% 7 8 10 11 Year: 0 1 2 3 4 5 6 12 13 14 15 16 17 10,000 B. Fixed wets Investments in fixed as Sales of fixed acets Cash flow from lixed assets -10,000 1.580 1,580 12 C. Operating cash flow Revenues Variable expenses xed expenses Depreciation Pretax pront Tax Profiter Operating cash flow 15,000 6,000 4.000 2,000 3,000 630 2,370 4,370 15.750 5,300 4,200 2,000 3,250 683 2,56B 4,568 16,538 6,515 4,410 1.200 2.000 3,513 738 2,775 4.775 17,354 6,946 4.631 2,000 3,788 T 796 2,993 4,993 18,233 7,293 4,862 2.000 4,078 256 3.221 5,221 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 D. Working capital Working capital Change in working capital Cash flow from invest in working capital 1,500 1,500 1,500 4,075 2,335 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 3.250 -3,039 3,039 E. Project valuation Total project cash flow Discount factor PV of cash flow Nel pran vue -11,500 1.000 -11,500 6,113.1 1,795 0.893 1,603 4,364 0.797 3,479 4,561 0.712 3,246 1,758 0.636 3,030 5,903 0.567 3,915 4,619 0.507 2.340 Sheel 1 + # EP - + 100% AutoSave OFF OFF AGE 5 Spreadsheet 101 - Saved to my Mac Home Insert Draw Page Layout Formulas Data Review View Acrobat Tell me Share Comments X [G Calibri (Body) v 11 v AP General Insert I Delete 28-03 v Paste B 1 I U 7 ar Ar = = = Y ideas Conditional Format Formatting as Table Styles Formato Sort & Filter Find & Select Create and Share Adobe PDF M15 X fx B D E F G H . L M N P R 5 UJ W 1 2 4 5 A. Inputs Initial investment is thousands) Salvage value (s thousands Initial revenues is thousands Variablecosis of revenues Initial fined costs $thousands Inflation rate) Discount rate Receivables at sales Inventory of next year's costs! Tax The 10,000 2,000 15,000 100% %, 4,000 5.0% 12 0% %, 16.7% 15.0% 210% 7 8 10 11 Year: 0 1 2 3 4 5 6 12 13 14 15 16 17 10,000 B. Fixed wets Investments in fixed as Sales of fixed acets Cash flow from lixed assets -10,000 1.580 1,580 12 C. Operating cash flow Revenues Variable expenses xed expenses Depreciation Pretax pront Tax Profiter Operating cash flow 15,000 6,000 4.000 2,000 3,000 630 2,370 4,370 15.750 5,300 4,200 2,000 3,250 683 2,56B 4,568 16,538 6,515 4,410 1.200 2.000 3,513 738 2,775 4.775 17,354 6,946 4.631 2,000 3,788 T 796 2,993 4,993 18,233 7,293 4,862 2.000 4,078 256 3.221 5,221 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 D. Working capital Working capital Change in working capital Cash flow from invest in working capital 1,500 1,500 1,500 4,075 2,335 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 3.250 -3,039 3,039 E. Project valuation Total project cash flow Discount factor PV of cash flow Nel pran vue -11,500 1.000 -11,500 6,113.1 1,795 0.893 1,603 4,364 0.797 3,479 4,561 0.712 3,246 1,758 0.636 3,030 5,903 0.567 3,915 4,619 0.507 2.340 Sheel 1 + # EP - + 100%