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Dell Technologies Inc (DELL) is considering producing a VR headset for gaming. Use the information below to evaluate the project and answer the questions that follow. There is no NWC required or salvage value for this project. Assume straight-line depreciation of the Inouis Unit sales Price (per unit) $ Variable cost (per un $ Fixed costs (per year $ Life Initial cost 700,000 300 150 50 000 000 7 100,000,000 Required return Tax rate Unit sales uncertainty Price uncertainty Variable cost uncertair Fixed cost uncertainty 28% 25% 10% 15% 10% Question 1 - Complete the pro forma income statements for each of the three scenarios: Base, Worst, and Best Case. Use the uncertainty percentages given above to determine the amount of change in unit sales, price, variable costs, and fixed costs on a +/- basis. Remember that increasing costs will be a worse outcome for the project. Estimate the NPV for each scenario. /AF.aviy Be Cze Wir 233e G-S2322 Unit sales Price (per unit) Variable cost (per unit) Fixed costs (per year) Accounting Break Even Revenues Variable costs Fixed costs Depreciation EBIT Taxes (284 Net income OCF NPY Cash Break Even B C E F G H 3 Question 2 - Calculate the Accounting, Cash, and Financial breakeven points using the Base Case scenario. You may use the formulas for each or the Goal Seek tool in Excel. If you use Goal Seek, include a snapshot of your Goal Seek window prior to finding the solution in the space to the right /5277 3 Accounting breakeven: Units Cash breakeven. Units 5 Financial breakeven: Units Financial Break Even 1 Question 3 - Perform an NPV sensitivity analysis of the Base Case model by evaluating each of the four input variables separately. Use a one-way data table for each. Looking at the graph below, which variable is NPV most sensitive to? Choose from the dropdown list. /227 AY % Change from base case Units sales NPY % Change from Price (per unit) NPV -8094 -30% -20% -10%. -20% - 10% 700.000 300 1024 20% 30% 20%. % Change from base case Variable cost (per unit) % Change from NPY Fixed costs (per year) NPM -30% -20% -10% -30% -20% | -10% 150 50 000 000 10% 20% 30% 10% 2024 30% Which input variable is NPV most sensitive to? Dell Technologies Inc (DELL) is considering producing a VR headset for gaming. Use the information below to evaluate the project and answer the questions that follow. There is no NWC required or salvage value for this project. Assume straight-line depreciation of the Inouis Unit sales Price (per unit) $ Variable cost (per un $ Fixed costs (per year $ Life Initial cost 700,000 300 150 50 000 000 7 100,000,000 Required return Tax rate Unit sales uncertainty Price uncertainty Variable cost uncertair Fixed cost uncertainty 28% 25% 10% 15% 10% Question 1 - Complete the pro forma income statements for each of the three scenarios: Base, Worst, and Best Case. Use the uncertainty percentages given above to determine the amount of change in unit sales, price, variable costs, and fixed costs on a +/- basis. Remember that increasing costs will be a worse outcome for the project. Estimate the NPV for each scenario. /AF.aviy Be Cze Wir 233e G-S2322 Unit sales Price (per unit) Variable cost (per unit) Fixed costs (per year) Accounting Break Even Revenues Variable costs Fixed costs Depreciation EBIT Taxes (284 Net income OCF NPY Cash Break Even B C E F G H 3 Question 2 - Calculate the Accounting, Cash, and Financial breakeven points using the Base Case scenario. You may use the formulas for each or the Goal Seek tool in Excel. If you use Goal Seek, include a snapshot of your Goal Seek window prior to finding the solution in the space to the right /5277 3 Accounting breakeven: Units Cash breakeven. Units 5 Financial breakeven: Units Financial Break Even 1 Question 3 - Perform an NPV sensitivity analysis of the Base Case model by evaluating each of the four input variables separately. Use a one-way data table for each. Looking at the graph below, which variable is NPV most sensitive to? Choose from the dropdown list. /227 AY % Change from base case Units sales NPY % Change from Price (per unit) NPV -8094 -30% -20% -10%. -20% - 10% 700.000 300 1024 20% 30% 20%. % Change from base case Variable cost (per unit) % Change from NPY Fixed costs (per year) NPM -30% -20% -10% -30% -20% | -10% 150 50 000 000 10% 20% 30% 10% 2024 30% Which input variable is NPV most sensitive to