Scenario analysis: an example Because of the strong competition (Presence of a competing store), the opening of a new plant may not be as attractive as expected. If the competition causes 15% reduction in sales and variable costs to increase to 82% of sales, what happens to NPV under this scenario? 1. Sales $13,600,000 2. VC $11,152,000 3. FC 2,000,000 4. Depreciation 450,000 5. Pre-tax profit -2,000 6. Taxes 7. Profit after tax -2,000 Cash flows 448,000