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Please show how to solve on excel sheet ! ! ! Please fill in the values on the excel sheet photo thats provided Amadeus Corporation
Please show how to solve on excel sheet Please fill in the values on the excel sheet photo thats provided
Amadeus Corporation is considering the issue of a new product to be added to its product mix. They hired you, a recent business graduate from MacEwan for conducting the analysis The production line would be set up in an unused space at the company's main plant. The plant space could be leased out to another firm at $ per year They have to buy new machinery The approximate cost of the machine would be $ with another $ in shipping and handling charges It would also cost an additional $ to install the equipment The machinery has an economic life of years and would be in Class with a CCA rate of The machinery is expected to have a salvage value of $ after years of use The new product line would generate incremental sales of units per year for years and they are expected to grow per year. The cost per unit is estimated in $ per unit in the first year. Each unit can be sold for $ in the first year The sales price and cost are both expected to increase by per year due to inflation The fixed costs are estimated to be $ at the end of st year and would increase with inflation To handle the new product line the firm's net operating working capital would be an amount equal to of sales revenues The firm tax rate is and its overall weighted average cost of capital WACC is The project is considered by the financial department to be as risky as the company Requirements Using an Excel spreadsheet: Find the NPV IRR and discounted payback period PBP of the project by using the pro forma financial statement method to determine cash flows. Enter the input variables in cells of their own at the top of the spreadsheet so it is easier to do sensitivity analysis calculations Set up the necessary equations by referencing to the input variable cells. The spreadsheet must be formula driven; do not put any numbers in equations, only cell references Use Excel's builtin functions wherever possible eg NPV and IRR functions Breakeven analysis cash BE point only Set up a formula in Excel this formula is not builtin to calculate the cash breakeven point for the base case. Hint: Cash breakeven point shows a level of sales that the operating cash flow OCF would be zero. Cash BE point can be calculated: Q FC P V Q Level of sales FC Fixed costs P Price level vvariable cost per unit Sensitivity analysis: Consider the following assumptions for the company and for each case individually calculate the NPV and the IRR and include these analyses in your final recommendation Perform sensitivity analysis on the unit sales, variable costs and the cost of capital for the project. Assume that each of these variables can vary from its basecase value by Summarize the results in a table NPVs and IRRS for each sensitivity analysis Scenario Analysis: Assume that you are confident of your estimates of all variables that affect the project's cash flows except unit sales and sales price. If product acceptance is poor, unit sales will be only units a year and the unit price will be only $; a strong demand will produce sales of units and a unit price of $ The marketing department told you that there is a chance of poor acceptance and chance of strong acceptance, and a chance of average acceptance the base casea What are the worst case NPV and the best case NPV b What are the expected NPV and risk involved given the mentioned probabilities? Recommendation: Use the results you obtained in the NPV IRR breakeven, sensitivity and scenario analysis above to write a one page report on your findings and recommend whether or not the company should proceed with the project.
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