Need help on a and b only!

please gove formulas to how you find your answers!

Investment (enter with sign) Plant life Salvage value Variable Cost% Fixed operating cost Tax rate Working capital Required Rate of Return Sales volume multiple Sales volume Unit price Revenues Variable Operating Costs Fixed Operating Costs Depreciation Expense Net Operating Income Less: Taxes NOPAT Plus: Depreciation Less: CAPEX Less: Working Capital Free Cash Flow NPV IRR Equivalent Annual Cost PROBLEM 3-5: Breakeven Sensitivity Analysis Given $ (4,000,000) 5 Years $ 400,000 45% $ 1,000,000 38% 10% (Percent of the expected change in revenues for the year) Year 1 2 3 4 $ 1,000,000 $ 1.500,000 2.00 $3,000,000 $3,500,000 5 $2,000,000 2.00 2.50 2.50 2.50 3,000,000 8.750,000 2,000,000 7,500,000 (900,000) (1,350,000) (3,375,000) (1,000,000) 5,000,000 (3,937,500) (2.250,000) (1,000,000) (800,000) $ (700,000) $ (1,000,000) (1,000,000) (1.000.000) (800,000) (800,000) (800,000) (800,000) (150,000) $2,325,000 $3,012,500 $950,000 57,000 (1.144.750) (361,000) (93,000) $1,441,500 $1,867,750 $ 589.000 800,000 (883.500) $ 266,000 (434,000) $ 800,000 800.000 800,000 800,000 248,000 (100,000) (125.000) 375.000 500,000 (450,000) 257,000 $2,116,500 $3,042 750 266,000 $ $2.137.000 0 15% 1.00 (4,000,000) (200,000) $ (4.200,000) $ $ 419,435 18% $ 125,124 REN Solution a. What are the key sources of risk that you see in this project? b. Breakeven sensitivity analysis Estimated Value Breakeven Value Variable Initial Capex $ (4,000,000) $4,419,435.25 45% 49% Variable Cost as a % of Sales Working Capital % of new Sales Sales volume multiplier 10% 27% 1 0.92 c. Discuss results of part b. d. Should you always seek to reduce project risk? Percent Difference Solution Legend Value given in problem -Formula/Calculation/Analysis required -Qualitative analysis or Short answer reqe -Goal Seek or Solver cell -Crystal Ball Input -Crystal Ball Output Investment (enter with sign) Plant life Salvage value Variable Cost% Fixed operating cost Tax rate Working capital Required Rate of Return Sales volume multiple Sales volume Unit price Revenues Variable Operating Costs Fixed Operating Costs Depreciation Expense Net Operating Income Less: Taxes NOPAT Plus: Depreciation Less: CAPEX Less: Working Capital Free Cash Flow NPV IRR Equivalent Annual Cost PROBLEM 3-5: Breakeven Sensitivity Analysis Given $ (4,000,000) 5 Years $ 400,000 45% $ 1,000,000 38% 10% (Percent of the expected change in revenues for the year) Year 1 2 3 4 $ 1,000,000 $ 1.500,000 2.00 $3,000,000 $3,500,000 5 $2,000,000 2.00 2.50 2.50 2.50 3,000,000 8.750,000 2,000,000 7,500,000 (900,000) (1,350,000) (3,375,000) (1,000,000) 5,000,000 (3,937,500) (2.250,000) (1,000,000) (800,000) $ (700,000) $ (1,000,000) (1,000,000) (1.000.000) (800,000) (800,000) (800,000) (800,000) (150,000) $2,325,000 $3,012,500 $950,000 57,000 (1.144.750) (361,000) (93,000) $1,441,500 $1,867,750 $ 589.000 800,000 (883.500) $ 266,000 (434,000) $ 800,000 800.000 800,000 800,000 248,000 (100,000) (125.000) 375.000 500,000 (450,000) 257,000 $2,116,500 $3,042 750 266,000 $ $2.137.000 0 15% 1.00 (4,000,000) (200,000) $ (4.200,000) $ $ 419,435 18% $ 125,124 REN Solution a. What are the key sources of risk that you see in this project? b. Breakeven sensitivity analysis Estimated Value Breakeven Value Variable Initial Capex $ (4,000,000) $4,419,435.25 45% 49% Variable Cost as a % of Sales Working Capital % of new Sales Sales volume multiplier 10% 27% 1 0.92 c. Discuss results of part b. d. Should you always seek to reduce project risk? Percent Difference Solution Legend Value given in problem -Formula/Calculation/Analysis required -Qualitative analysis or Short answer reqe -Goal Seek or Solver cell -Crystal Ball Input -Crystal Ball Output