PART 1 CALCULATION

Sales	Year 1	Year 2	Year 3	Year 4	Year 5
New	$80,600,000	$85,800,000	$65,000,000	$49,400,000	$39,000,000
Lost sales	11,400,000	11,400,000
Lost rev.	11,050,000	5,950,000
Net sales	$58,150,000	$68,450,000	$65,000,000	$49,400,000	$39,000,000
Variable cost
New	$33,325,000	$35,475,000	$26,875,000	$20,425,000	$16,125,000
Lost sales	4,350,000	4,350,000
	$28,975,000	$31,125,000	$26,875,000	$20,425,000	$16,125,000
Sales	$58,150,000	$68,450,000	$65,000,000	$49,400,000	$39,000,000
VC	28,975,000	31,125,000	26,875,000	20,425,000	16,125,000
Fixed costs	6,100,000	6,100,000	6,100,000	6,100,000	6,100,000
Dep	5,787,450	9,918,450	7,083,450	5,058,450	3,616,650
EBT	$17,287,550	$21,306,550	$24,941,550	$17,816,550	$13,158,350
Tax	6,050,643	7,457,293	8,729,543	6,235,793	4,605,423
After tax (NI)	$11,236,908	$13,849,258	$16,212,008	$11,580,758	$8,552,928
+Dep	5,787,450	9,918,450	7,083,450	5,058,450	3,616,650
OCF	$17,024,358	$23,767,708	$23,295,458	$16,639,208	$12,169,578
NWC
Beg	$0	$11,630,000	$13,690,000	$13,000,000	$9,880,000
End	11,630,000	13,690,000	13,000,000	9,880,000	0
NWC CF	($11,630,000)	($2,060,000)	$690,000	$3,120,000	$9,880,000
Salvage
BV of equipment	$9,035,550
Taxes	1,027,443
Salvage CF	$7,127,443
TABLE
Year	Net CF
0	($40,500,000)
1	$5,394,358
2	$21,707,708
3	$23,985,458
4	$19,759,208
5	$29,177,020
	Payback period	2 year + (13397934/ 23985458) = 2.559
	PI	1.687 ( PVCI / PVCo)
	IRR	32.28%
	NPV	$27,807,175.32	(Applying Discounting factor 12% in Table shown above)

points for each manufacturing process? What is the DOL for each manufacturing process? Graph the DOL for each manufac- turing process on the same graph for different unit sales. c MINICASE has asked Jay to analyze how changes in the price of the new smart phone and changes in the quantity sold will affect the NPV of the project. Shelley has asked Jay to prepare a memo answering the following questions. Conch Republic Electronics, Part 2 Shelley Couts, the owner of Conch Republic Electronics, had received the capital budgeting analysis from Jay McCanless for the new smart phone the company is considering. Shelley was pleased with the results, but she still had concerns about the new smart phone. Conch Republic had used a small market research firm for the past 20 years, but recently the founder of that firm retired. Because of this, she was not convinced the sales projections presented by the market research firm were entirely accurate. Additionally, because of rapid changes in technology, she was concerned that a competitor could enter the market. This would likely force Conch Republic to lower the sales price of its new smart phone. For these reasons, she QUESTIONS 1. How sensitive is the NPV to changes in the price of the new smart phone? 2. How sensitive is the NPV to changes in the quantity sold of the new smart phone