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 Blooper spreadsheet.

b. Calculate Bloopers working capital in each year of its project (from year 0 to year 6).

c. What is the change in project NPV?

F G H 5 6 5.0% SPREADSHEET 9.1 Financial forecasts for Blooper's magnoosium mine (dollar values in thousands) A B C D E A. Inputs 2 Initial Investment ($000) 15,000 | 3 Salvage value ($000) 2,000 4 Initial revenue ($000) 15,000 Initial expenses (5000) 10,000 Inflation rate (%) 7 Discount rate (%) 12.0% 8 Receivables (% of sales) 16.7% 9 Inventory (% of next year's costs) 15.0% 10 Tax rate (%) | 11 | 12 | Year: 13 B. Fixed assets | 14 | Investments in fixed assets 15 Sales of fixed assets 16C F, investment in fixed assets -15,000 | 17 | 18 C. Operating cash flow 19 Revenues 15,000 15,750 16,538 | 20 Expenses 10,000 10,500 11,025 21 Depreciation 3,000 3,000 3,000 22 Pretax profit 2,000 2.250 2,513 | 23 Tax 420 473 528 | 24 | Profit after tax 1,580 1,777 1,985 25 Operating cash flow 0 4,580 4,777 4,985 26 27 D. Working capital 28 Working capital 2,000 5850 5,850 6,143 6,450 29 Change in working capital 2,000 3,850 293 307 | 30CF, investment in wk capital -2,000 3,850 -293 | -307 1,580 1,580 17,365 11,576 3,000 2,789 586 2,203 5,203 18,233 12,155 3,000 3,078 646 2,432 5,432 6,772 322 -322 4,558 -2,214 2,214 -4,558 4,558 31 | 32 33 34 E. Project valuation roiect cash flow Total project cash flow Discount factor PV of cash flow Net present value -17,000 1 -17,000 1,108 730 0.893 652 4,484 0.797 3,575 4,678 0.712 3,330 4,881 0.636 3,102 7,646 0.567 4,339 6,138 0.507 3,110 35 36 F G H 5 6 5.0% SPREADSHEET 9.1 Financial forecasts for Blooper's magnoosium mine (dollar values in thousands) A B C D E A. Inputs 2 Initial Investment ($000) 15,000 | 3 Salvage value ($000) 2,000 4 Initial revenue ($000) 15,000 Initial expenses (5000) 10,000 Inflation rate (%) 7 Discount rate (%) 12.0% 8 Receivables (% of sales) 16.7% 9 Inventory (% of next year's costs) 15.0% 10 Tax rate (%) | 11 | 12 | Year: 13 B. Fixed assets | 14 | Investments in fixed assets 15 Sales of fixed assets 16C F, investment in fixed assets -15,000 | 17 | 18 C. Operating cash flow 19 Revenues 15,000 15,750 16,538 | 20 Expenses 10,000 10,500 11,025 21 Depreciation 3,000 3,000 3,000 22 Pretax profit 2,000 2.250 2,513 | 23 Tax 420 473 528 | 24 | Profit after tax 1,580 1,777 1,985 25 Operating cash flow 0 4,580 4,777 4,985 26 27 D. Working capital 28 Working capital 2,000 5850 5,850 6,143 6,450 29 Change in working capital 2,000 3,850 293 307 | 30CF, investment in wk capital -2,000 3,850 -293 | -307 1,580 1,580 17,365 11,576 3,000 2,789 586 2,203 5,203 18,233 12,155 3,000 3,078 646 2,432 5,432 6,772 322 -322 4,558 -2,214 2,214 -4,558 4,558 31 | 32 33 34 E. Project valuation roiect cash flow Total project cash flow Discount factor PV of cash flow Net present value -17,000 1 -17,000 1,108 730 0.893 652 4,484 0.797 3,575 4,678 0.712 3,330 4,881 0.636 3,102 7,646 0.567 4,339 6,138 0.507 3,110 35 36