SPREADSHEET 10.1 Financial projections for Blooper's magnoosium mine (dollar values in thousands). This table repeats the analysis in Spreadsheet 9.1 except that expenses are now broken down into variable and fixed expenses. 1 A. Inputs 2 Initial investment ($ thousands 3 Salvage value ($ thousands 4 Initial revenues ($ thousands 5 | Variable costs (% of revenues) 6 Initial fixed costs ($ thousands) 7 | Inflation rate (%) 8 | Discount rate (% 9 | Receivables % of sales 10,000 2,000 15,000 40,0% 4,000 5.0% 12.0% 16.7% 15.0% 35.0% 10 Inventory (% of next year's costs 11 | Tax rate (% 12 13 Year 14 B. Fixed assets 15Investments in fixed assets 16 Sales of fixed assets 17 Cash flow from investment in fixed assets 18 0 2 5 6 10,000 1,300 1,300 10,000 19 C. Operating cash flow 20 Revenues 15,00015,750 16,538 17,36418,233 6,000 6,300 6,615 6,946 7,293 4,000 4,200 4,410 4,631 4,862 2,000 2,000 2,000 2,000 2,000 3,000 3,250 3,513 3,7884,078 1,326 427 1,950 2,113 2,283 2,462 2,650 3,950 4,113 4,283 4,462 4,650 21 Variable expenses 22 Fixed expenses 23 Depreciatio 24 Pretax profit 25 Tax 26 Profit after tax 27 Operating cash flow 28 29 D. Working capital 30 Working capital 1,050 1,138 1,229 1,500 4,075 4,279 4,493 4,717 3,039 1,5002,575 0 225-1,679-3,039 -214-225 1,679 3,039 204 214 32 Cash flow from investment in working capital1500-2,575 -204 34 E. Project valuation t cash flow 36 Discount factor 37 PV of cash flow 38 Net present value -11,500 1,375 3,909 4,069 4,238 6,329 4,339 1.000 0.893 0.797 0.712 0.636 0.567 0.507 -11,500 1,228 3,116 2,896 2,693 3,591 2,198 4,223 Assignment 9 6 Saved Consider Blooper's mining project. Suppose that by investing an additional $1,000,000 Initially, Blooper could reduce varlable costs to 30% of sales. Use Spreadsheet 101. a. Find the incremental NPV for the Increased investment. (Do not round Intermediate calculatlons. Round your answer to the nearest whole dollar amount.) 24 points I NPV Skipped b. At what level of sales will accounting profits be unchanged if the firm makes the new investment? Assume the equipment receives the same straight-line depreclation treatment as in the original example. (Hint: Focus on the project's incremental effects on fixed and varlable costs.) (Do not round Intermediate calculations. Round your answer to the nearest whole dollar amount. Enter your answer eBook in thousands.) Re erences Sales revenue thousand c. What is the NPV break-even point in total sales if the firm Invests in the new equipment? (Negative value should be Indicated by a minus sign. Do not round Intermedlate calculations. Round your answer to the nearest whole dollar amount. Enter your answer In thousands.) NPV break-even thousand d. If the Blooper project operates at accounting break-even, wll net present value be positive or negative? O Positive Negative SPREADSHEET 10.1 Financial projections for Blooper's magnoosium mine (dollar values in thousands). This table repeats the analysis in Spreadsheet 9.1 except that expenses are now broken down into variable and fixed expenses. 1 A. Inputs 2 Initial investment ($ thousands 3 Salvage value ($ thousands 4 Initial revenues ($ thousands 5 | Variable costs (% of revenues) 6 Initial fixed costs ($ thousands) 7 | Inflation rate (%) 8 | Discount rate (% 9 | Receivables % of sales 10,000 2,000 15,000 40,0% 4,000 5.0% 12.0% 16.7% 15.0% 35.0% 10 Inventory (% of next year's costs 11 | Tax rate (% 12 13 Year 14 B. Fixed assets 15Investments in fixed assets 16 Sales of fixed assets 17 Cash flow from investment in fixed assets 18 0 2 5 6 10,000 1,300 1,300 10,000 19 C. Operating cash flow 20 Revenues 15,00015,750 16,538 17,36418,233 6,000 6,300 6,615 6,946 7,293 4,000 4,200 4,410 4,631 4,862 2,000 2,000 2,000 2,000 2,000 3,000 3,250 3,513 3,7884,078 1,326 427 1,950 2,113 2,283 2,462 2,650 3,950 4,113 4,283 4,462 4,650 21 Variable expenses 22 Fixed expenses 23 Depreciatio 24 Pretax profit 25 Tax 26 Profit after tax 27 Operating cash flow 28 29 D. Working capital 30 Working capital 1,050 1,138 1,229 1,500 4,075 4,279 4,493 4,717 3,039 1,5002,575 0 225-1,679-3,039 -214-225 1,679 3,039 204 214 32 Cash flow from investment in working capital1500-2,575 -204 34 E. Project valuation t cash flow 36 Discount factor 37 PV of cash flow 38 Net present value -11,500 1,375 3,909 4,069 4,238 6,329 4,339 1.000 0.893 0.797 0.712 0.636 0.567 0.507 -11,500 1,228 3,116 2,896 2,693 3,591 2,198 4,223 Assignment 9 6 Saved Consider Blooper's mining project. Suppose that by investing an additional $1,000,000 Initially, Blooper could reduce varlable costs to 30% of sales. Use Spreadsheet 101. a. Find the incremental NPV for the Increased investment. (Do not round Intermediate calculatlons. Round your answer to the nearest whole dollar amount.) 24 points I NPV Skipped b. At what level of sales will accounting profits be unchanged if the firm makes the new investment? Assume the equipment receives the same straight-line depreclation treatment as in the original example. (Hint: Focus on the project's incremental effects on fixed and varlable costs.) (Do not round Intermediate calculations. Round your answer to the nearest whole dollar amount. Enter your answer eBook in thousands.) Re erences Sales revenue thousand c. What is the NPV break-even point in total sales if the firm Invests in the new equipment? (Negative value should be Indicated by a minus sign. Do not round Intermedlate calculations. Round your answer to the nearest whole dollar amount. Enter your answer In thousands.) NPV break-even thousand d. If the Blooper project operates at accounting break-even, wll net present value be positive or negative? O Positive Negative