How would your projected financial performance change if sales fall 20% short of or are 20% higher than your base assumption? What does your analysis of these two scenarios imply for the proposed investment?

What do the net present value, internal rate of return, and payback values from your base scenario and the sales variation scenarios above imply for the proposed investment? Be sure to explain how the time value of money affects your calculations and analysis.

Use a 10% hurdle rate

	Actual		Projected
Year	2015	2016	2017	2018	2019
Total Revenue	$241,550	$209,685	$209,511	$199,194	$188,876
Cost of Sales	$164,855	$162,697	$155,765	$151,177	$146,589
Gross Profit	$76,695	$46,988	$53,746	$48,017	$42,288
Expenses	$68,092	$63,319	$59,258	$55,437	$51,616
Net Profit	$5,244	$(14,130)	$(7,711)	$(10,206)	$(12,702)
Profit Margin	0.022	-0.067	-0.037	-0.051	-0.067

The startup cost of the operations will be approximately $5 million. The financing could be divided as $2.5 million in long term debt, this can be paid back at a 4% interest rateover 20 years. The remaining $2.5 million are to be supplied as capital