Note: 18,233 is incorrect, that was my best guess.
Blooper's analysts have come up with the following revised estimates for its magnoosium mine: Range Pessimistic Optimistic Initial investment - 15% 40% -15% 20% Revenues Variable costs 25% 20% + Fixed cost 40% - 20% Working capital -25 % 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.) Project NPV Pessimistic Expected Optimistic Initial investment Revenues S 18,233 Variable costs Fixed costs Working capital A. Inputs Initial investment ($ thousands) Salvage value ($ thousands) Initial revenues ($ thousands) Variable costs (% of revenues) Initial fixed costs ($ thousands) 10,000 2,000 15,000 40.0% 4,000 Initial total expenses ($ thousands) 10,000 Inflation rate (%) 5.0% Discount rate (% 12.0% Receivables (% of sales) 16.7% Inventory (% of next year's costs) 15.0% Tax rate (%) 35.0% 4 6 Year: 0 1 2 3 5 B. Fixed assets Investments in fixed assets 10,000 Sales of fixed assets 1,300 Cash flow from fixed assets 1,300 -10,000 C. Operating cash flow 15,750 Revenues 15,000 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 3,250 3,000 3,513 3,788 4,078 1,427 Tax 1,050 1,138 1,229 1,326 Profit after tax 1,950 2,113 2,283 2,462 2,650 4,113 Operating cash flow 3,950 4,283 4,462 4,650 D. Working capital Working capital 4,075 4,493 4,717 3,039 1,500 4,279 Change in working capital -3,039 1,500 2,575 204 214 225 -1,679 Cash flow from investment in working capital -1,500 1,679 -2,575 -204 -214 -225 3,039 0.408 0.408 0.408 0.408 0.250 E.Project valuation Total project cash flow -11,500 1,375 4,339 3,909 4,069 4,238 6,329 Blooper's analysts have come up with the following revised estimates for its magnoosium mine: Range Pessimistic Optimistic Initial investment - 15% 40% -15% 20% Revenues Variable costs 25% 20% + Fixed cost 40% - 20% Working capital -25 % 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.) Project NPV Pessimistic Expected Optimistic Initial investment Revenues S 18,233 Variable costs Fixed costs Working capital A. Inputs Initial investment ($ thousands) Salvage value ($ thousands) Initial revenues ($ thousands) Variable costs (% of revenues) Initial fixed costs ($ thousands) 10,000 2,000 15,000 40.0% 4,000 Initial total expenses ($ thousands) 10,000 Inflation rate (%) 5.0% Discount rate (% 12.0% Receivables (% of sales) 16.7% Inventory (% of next year's costs) 15.0% Tax rate (%) 35.0% 4 6 Year: 0 1 2 3 5 B. Fixed assets Investments in fixed assets 10,000 Sales of fixed assets 1,300 Cash flow from fixed assets 1,300 -10,000 C. Operating cash flow 15,750 Revenues 15,000 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 3,250 3,000 3,513 3,788 4,078 1,427 Tax 1,050 1,138 1,229 1,326 Profit after tax 1,950 2,113 2,283 2,462 2,650 4,113 Operating cash flow 3,950 4,283 4,462 4,650 D. Working capital Working capital 4,075 4,493 4,717 3,039 1,500 4,279 Change in working capital -3,039 1,500 2,575 204 214 225 -1,679 Cash flow from investment in working capital -1,500 1,679 -2,575 -204 -214 -225 3,039 0.408 0.408 0.408 0.408 0.250 E.Project valuation Total project cash flow -11,500 1,375 4,339 3,909 4,069 4,238 6,329
