Q1 Below is a project cash flow forecasting worksheet that you will use to perform some sensitivity and scenario analysis. We did NOT formally do these things in class, although we discussed them conceptually on multiple occasions. Read the questions carefully and follow your intuition. Q1a Is this a value-adding project under the base case assumptions? Why or why not? Q1b If "Sales price per unit, Year 1 " is changed to $1.65, what is the percent change in the unit price relative to the initial value ($1.50) in the base case? Q1c What is the new project NPV when the "Sales price per unit, Year 1 " is changed to $1.65 ? Q1d What is the percentage change in NPV with the new price relative to the base case? What is the percentage change in NPV for a 1% change in the "Sales price per unit, Year 1"? SHOW WORK HFRF. HTGHT IGHT FINAT. ANSWFR IN YFI I OW IPROIFCT CASH FT.OWS ARE RFI.OW) 1e Conduct a scenario analysis by changing the project assumptions. Produce two (2) additional sets of inputs for the project cash flow forecast, one where the project is still value-adding and worth pursuing, and the second where the project is NOT value-adding and should not be pursued. You should adjust at least 2 inputs each time (aka create a new "scenario"). Please identify your changes clearly. Show vour work next to the column with the base case assumbtions. SHOW WORK HERE Figure 13-2 Analysis of a New (Expansion) Project: Cash Flows and Performance Measures Q1 Below is a project cash flow forecasting worksheet that you will use to perform some sensitivity and scenario analysis. We did NOT formally do these things in class, although we discussed them conceptually on multiple occasions. Read the questions carefully and follow your intuition. Q1a Is this a value-adding project under the base case assumptions? Why or why not? Q1b If "Sales price per unit, Year 1 " is changed to $1.65, what is the percent change in the unit price relative to the initial value ($1.50) in the base case? Q1c What is the new project NPV when the "Sales price per unit, Year 1 " is changed to $1.65 ? Q1d What is the percentage change in NPV with the new price relative to the base case? What is the percentage change in NPV for a 1% change in the "Sales price per unit, Year 1"? SHOW WORK HFRF. HTGHT IGHT FINAT. ANSWFR IN YFI I OW IPROIFCT CASH FT.OWS ARE RFI.OW) 1e Conduct a scenario analysis by changing the project assumptions. Produce two (2) additional sets of inputs for the project cash flow forecast, one where the project is still value-adding and worth pursuing, and the second where the project is NOT value-adding and should not be pursued. You should adjust at least 2 inputs each time (aka create a new "scenario"). Please identify your changes clearly. Show vour work next to the column with the base case assumbtions. SHOW WORK HERE Figure 13-2 Analysis of a New (Expansion) Project: Cash Flows and Performance Measures
