Suppose that Bloopers customers paid their bills with an average 3-month delay (instead of 2 months) and that Bloopers inventories were 20% rather than 15% of next years expenses. Use the below Blooper spreadsheet.

See SPREADSHEET 9.1 in the eBook for the baseline project evaluation and resulting NPV assuming 15% inventory expense SPREADSHEET 9.1 Financial projections for Blooper's Magnoosium mine (dollar values in thousands)

Inputs		Spreadsheet Name
Initial Investment	12,500	Investment
Salvage value	2,500	Salvage
Initial revenue	22,000	Initial_rev
Initial expenses	11,000	Intial_exp
Inflation rate	0.05	Inflation
Discount rate	0.12	Disc_rate
Acct receiv. as % of sales	1/4	A_R
Inven. as % of expenses	0.2	Inv_pct
Tax rate	0.21	Tax_rate

a. Would project NPV be higher or lower than that in the Blooper spreadsheet?

• Lower

• Higher

b. Calculate Bloopers working capital in each year of its project. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

0

1

2

3

4

5

6

c. What is the change in project NPV? (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

The NPV Increases from $4223 to ________