Parameters Sales volume (units) Sales Price Variable cost Fixed cost Depreciation 50,000 4.00 2.50 12000 30,000 Shark Attractant Project Parameters (cont.) Tax rate Required return Fixed assets Net working capital 34% 20% 90,000 20,000 Using the information in Sheet1 in the Excel file For_Quiz_Week_4.xlsx in the Resources section of Week 4 perform sensitivity analysis of NPV to changes in Sales Volume and Price. Use the Excel Data Table tool. Use 40,000, 50,000, and 60,000 units as possible values for Sales Volume and $3, $4, and $5 as possible values for Price. Interpret the results in terms of the impact of these values on NPV. Save your work and upload the Excel file to the Assignment section of Week 4. Save the file under your name. The password to open the Excel file is 'tvm1'. 1 3 Projected Capital Requirements 0 NWC 20,000 Net fixed assets 90,000 Total investment 110,000 20,000 20,000 60,000 80,000 2 20,000 30,000 50,000 20,000 Projected Income Statement Sales 200,000 Variable costs 125,000 Fixed costs 12,000 Depreciation 30,000 EBIT 33,000 Taxes (34%) 11,220 Net Income 21,780 Calculation of Operating Cash Flows EBIT 33,000 Depreciation 30,000 Taxes 11,220 Operating cash flow 51,780 0 1 2 51,780 51,780 FCF Operating cash flow Change in NWC Capital spending Total project cash flow 3 51,780 20,000 (20,000) (90,000) (110,000) 51,780 51,780 71,780 IRR NPV 25.76% 10,647.69 Sensitivity of NPV to Changes in Sales Volume and Price Sales Volume (units) Interpreting the results. Price