Consider the same project from Q1, but suppose that the project will require working capital in the amount of $0.87 in 2022 for every unit of next year's forecasted sales and that this amount will grow with inflation going forward. What is the project's NPV? \begin{tabular}{l|l} ProJect NPV & Sensitivity Analysis \end{tabular} (in thousands of $ ) Year \begin{tabular}{|l|l|l|l|l|l|l|l|} \hline 2022 & 2023 & 2024 & 2025 & 2026 & 2027 & 2028 & 2029 \\ \hline \end{tabular} Working Capital Work Cap / Next Yr Unit Sales Working Capital Cash Flow Forecasts Sales Revenue Variable Costs Gross Margin $0.87 Cash Fixed Costs Depreciation Total Fixed Costs Operating Profit \begin{tabular}{lrrrrrrrr} Taxes & & ($957) & ($957) & ($957) & ($957) & ($957) & ($957) & ($957) \\ \hline Net Profit & ($3,600) & ($3,600) & ($3,600) & ($3,600) & ($3,600) & ($3,600) & ($3,600) \end{tabular} \begin{tabular}{l|r|r|r|r|r|r|r|} \hline Add Back Depreciation & $4,557 & $4,557 & $4,557 & $4,557 & $4,557 & $4,557 & $4,557 \\ \hline Operating Cash Flow & $957 & $957 & $957 & $957 & $957 & $957 & $957 \end{tabular} Investment in Working Capital Investment in Plant \& Equip ($37,500) Investment Cash Flow Cash Flows Present Value of Each Cash Flow Net Present Value \begin{tabular}{|l|l|l|l|l|l|l|l|} \hline$0 & $957 & $957 & $957 & $957 & $957 & $957 & $957 \\ \hline$0 & $957 & $957 & $957 & $957 & $957 & $957 & $957 \\ \hline \end{tabular} Assume that the product life-cycle of seven years is viewed as a safe bet, but that the scale of demand for the product is highly uncertain. Analyze the sensitivity of the project's NPV to the unit sales scale factor and to the cost of capital. Note: Change the axis min and max values. Also, change the data cells since scenario input number are more than the Excel examples discusssed in the class. Consider the same project from Q1, but suppose that the project will require working capital in the amount of $0.87 in 2022 for every unit of next year's forecasted sales and that this amount will grow with inflation going forward. What is the project's NPV? \begin{tabular}{l|l} ProJect NPV & Sensitivity Analysis \end{tabular} (in thousands of $ ) Year \begin{tabular}{|l|l|l|l|l|l|l|l|} \hline 2022 & 2023 & 2024 & 2025 & 2026 & 2027 & 2028 & 2029 \\ \hline \end{tabular} Working Capital Work Cap / Next Yr Unit Sales Working Capital Cash Flow Forecasts Sales Revenue Variable Costs Gross Margin $0.87 Cash Fixed Costs Depreciation Total Fixed Costs Operating Profit \begin{tabular}{lrrrrrrrr} Taxes & & ($957) & ($957) & ($957) & ($957) & ($957) & ($957) & ($957) \\ \hline Net Profit & ($3,600) & ($3,600) & ($3,600) & ($3,600) & ($3,600) & ($3,600) & ($3,600) \end{tabular} \begin{tabular}{l|r|r|r|r|r|r|r|} \hline Add Back Depreciation & $4,557 & $4,557 & $4,557 & $4,557 & $4,557 & $4,557 & $4,557 \\ \hline Operating Cash Flow & $957 & $957 & $957 & $957 & $957 & $957 & $957 \end{tabular} Investment in Working Capital Investment in Plant \& Equip ($37,500) Investment Cash Flow Cash Flows Present Value of Each Cash Flow Net Present Value \begin{tabular}{|l|l|l|l|l|l|l|l|} \hline$0 & $957 & $957 & $957 & $957 & $957 & $957 & $957 \\ \hline$0 & $957 & $957 & $957 & $957 & $957 & $957 & $957 \\ \hline \end{tabular} Assume that the product life-cycle of seven years is viewed as a safe bet, but that the scale of demand for the product is highly uncertain. Analyze the sensitivity of the project's NPV to the unit sales scale factor and to the cost of capital. Note: Change the axis min and max values. Also, change the data cells since scenario input number are more than the Excel examples discusssed in the class
