Reebok's project (Problem 2 ar Year Year Key Ass umptions Sales Growth Rate Change in Sales Growth Rate from previous period Inflation Rate Real Cost of Capital Tax Rate 3.1% 8.0% 40.0% Dis count nt Rate Cost ital Cumulative Discount Factor Price or Cost/ Unit Unit Sales Sales Revenue/ Unit Variable Cost/ Unit Cash Fixed Costs 4.99 20.50 $20,000,000 Cash Flow Forecasts Sales Revenue Variable Costs Gross Margin Cash Fixed Costs Depreciation Total Fixed Costs Operating Profit Net Profit Add Back Depreciation Operating Cash Flow (OCF Cash Flows Present Value of Each Cash Flow Net Present Value (h) Comple table to the right and indicate formula for cell G49? Use Data Tables tool (5 points) Sales Growth rate (year 2 5% 10% 15% 20% 6,000,000 7,000,000 8,000,000 9,000,000 Unit Sales ear 1 Problem 2 Managers at Reebok are considering entering rollerblades market that they expect to be strong over th years. To enter market successfully Reebok will need to build a manufacturing facility, spend money orn design, marketing etc Is the project worth undertaking? The estimates are as follows. The cost of building a new manufacturin million its salvage value after 5 years is only $10 million. The initial (year 1) sales are estimated at 8,000 inflation rate, real cost of capital and tax rate are assumed to be constant over time. Assume that Sale unit, Variable cost and Cash Fixed cost grow over time at the rate of inflation All other given/assumed variables are shown in the Problem 2.2 sheet Answer the following questions a) Complete cash flow forecasts in sheet Problem 2.2 (4 points) (b) What is the Net Present Value of this project? (3 points c) Would you invest in the project on the basis of its NPV? Explain (3 points) (d) What is the formula in cell C27 of Problem 2.2 sheet? (3 points) (e) What is the formula in cell G12 and G13 of Problem 2.2 sheet? (3 points (f) What is the formula in cell E5 of Problem 2.2 sheet? (3 points) (g) Assuming that year 2 sales growth rate is 8%, what level of unit sales in year 1 will be ust sufficient to accept this project? (5 points) Reebok's project (Problem 2 ar Year Year Key Ass umptions Sales Growth Rate Change in Sales Growth Rate from previous period Inflation Rate Real Cost of Capital Tax Rate 3.1% 8.0% 40.0% Dis count nt Rate Cost ital Cumulative Discount Factor Price or Cost/ Unit Unit Sales Sales Revenue/ Unit Variable Cost/ Unit Cash Fixed Costs 4.99 20.50 $20,000,000 Cash Flow Forecasts Sales Revenue Variable Costs Gross Margin Cash Fixed Costs Depreciation Total Fixed Costs Operating Profit Net Profit Add Back Depreciation Operating Cash Flow (OCF Cash Flows Present Value of Each Cash Flow Net Present Value (h) Comple table to the right and indicate formula for cell G49? Use Data Tables tool (5 points) Sales Growth rate (year 2 5% 10% 15% 20% 6,000,000 7,000,000 8,000,000 9,000,000 Unit Sales ear 1 Problem 2 Managers at Reebok are considering entering rollerblades market that they expect to be strong over th years. To enter market successfully Reebok will need to build a manufacturing facility, spend money orn design, marketing etc Is the project worth undertaking? The estimates are as follows. The cost of building a new manufacturin million its salvage value after 5 years is only $10 million. The initial (year 1) sales are estimated at 8,000 inflation rate, real cost of capital and tax rate are assumed to be constant over time. Assume that Sale unit, Variable cost and Cash Fixed cost grow over time at the rate of inflation All other given/assumed variables are shown in the Problem 2.2 sheet Answer the following questions a) Complete cash flow forecasts in sheet Problem 2.2 (4 points) (b) What is the Net Present Value of this project? (3 points c) Would you invest in the project on the basis of its NPV? Explain (3 points) (d) What is the formula in cell C27 of Problem 2.2 sheet? (3 points) (e) What is the formula in cell G12 and G13 of Problem 2.2 sheet? (3 points (f) What is the formula in cell E5 of Problem 2.2 sheet? (3 points) (g) Assuming that year 2 sales growth rate is 8%, what level of unit sales in year 1 will be ust sufficient to accept this project? (5 points)