Suppose that Blooper's customers paid their bills with an average 3-month delay (instead of 2 months) and that Blooper's inventories were 20% rather than 15% of next year's 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 Initial Investment Salvage value Initial revenue Initial expenses Inflation rate Discount rate Acct receiv. as % of sales nven. as % of expenses Tax rate 15,000 3,000 22,800 12,000 0.05 0.12 Spreadsheet Name Investment Salvage Initial rev Intial exp Inflation Disc rate 0.2 0.21 Inv pot Tax_rate a. Would project NPV be higher or lower than that in the Blooper spreadsheet? Lower b. Calculate Blooper's working capital in each year of its project. (Do not round Intermediate calculations. Round your answers to the nearest whole dollar amount.) Year Working Capital 0 1 2 3 4 5 OP 6 b. Calculate Blooper's working capital in each year of its project. (Do not round Intermediate calculations. Round your answers to the nearest whole dollar amount.) Year Working Capital o 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 $4,223 to ancial projections for Blooper's Magnoosium mine (dollar values in thousands) A. Inputs Initial Investment 15,000 Investment Salvage value 3,000 Salvage Initial revenue 22,800 Initial rev Initial expenses 12,000 Intial_exp Inflation rate 5% Inflation Discount rate 12% Disc rate Acct receiv, as % of sales 16.7% AR Inven, as % of expenses 15% Inv_pct Tax rate 21% Tax rate 0 1 2 3 4 5 Year: B. Fixed assets Investments in fixed assets Sales of fixed assets CF, invest. in fixed assets 15.000 -15.000 0 0 2.370 2.370 C. Operating cash flow Revenues Expenses Depreciation Pretax profit Tax Profit after tax Cash flow from operations 22.800 12.000 3.000 7.800 1638 6.162 9,162 23,940 12,600 3000 8,340 1.751 6,589 9,589 25,137 13.230 3.000 8.907 1870 7.037 10.037 26,394 13.892 3.000 9,502 1995 7,507 10,507) 27,714 14,587 3.000 10.127 2127) 8.000 11.000 D. Working capital Working capital Change in working capital CF invest in wk capital 9.516 2 400 2.400 -2.400 8.220 5.820 -5.620 8.631 411 -411 9,062 431 431 454 6.929 -2.587 2.587 -6,929 6.929 454 E. Project valuation Total project cash flow Discount factor PV of cash flow Net present value - 17.400 1 -17,400 18,548 3,342 0.8929 2.984 9.178 0.79721 7 317 9.606 0.7118 6.837 10.053 0.6355 6.389 13,587 0.5674 7.710 9,299 0.5066 4.711 Suppose that Blooper's customers paid their bills with an average 3-month delay (instead of 2 months) and that Blooper's inventories were 20% rather than 15% of next year's 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 Initial Investment Salvage value Initial revenue Initial expenses Inflation rate Discount rate Acct receiv. as % of sales nven. as % of expenses Tax rate 15,000 3,000 22,800 12,000 0.05 0.12 Spreadsheet Name Investment Salvage Initial rev Intial exp Inflation Disc rate 0.2 0.21 Inv pot Tax_rate a. Would project NPV be higher or lower than that in the Blooper spreadsheet? Lower b. Calculate Blooper's working capital in each year of its project. (Do not round Intermediate calculations. Round your answers to the nearest whole dollar amount.) Year Working Capital 0 1 2 3 4 5 OP 6 b. Calculate Blooper's working capital in each year of its project. (Do not round Intermediate calculations. Round your answers to the nearest whole dollar amount.) Year Working Capital o 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 $4,223 to ancial projections for Blooper's Magnoosium mine (dollar values in thousands) A. Inputs Initial Investment 15,000 Investment Salvage value 3,000 Salvage Initial revenue 22,800 Initial rev Initial expenses 12,000 Intial_exp Inflation rate 5% Inflation Discount rate 12% Disc rate Acct receiv, as % of sales 16.7% AR Inven, as % of expenses 15% Inv_pct Tax rate 21% Tax rate 0 1 2 3 4 5 Year: B. Fixed assets Investments in fixed assets Sales of fixed assets CF, invest. in fixed assets 15.000 -15.000 0 0 2.370 2.370 C. Operating cash flow Revenues Expenses Depreciation Pretax profit Tax Profit after tax Cash flow from operations 22.800 12.000 3.000 7.800 1638 6.162 9,162 23,940 12,600 3000 8,340 1.751 6,589 9,589 25,137 13.230 3.000 8.907 1870 7.037 10.037 26,394 13.892 3.000 9,502 1995 7,507 10,507) 27,714 14,587 3.000 10.127 2127) 8.000 11.000 D. Working capital Working capital Change in working capital CF invest in wk capital 9.516 2 400 2.400 -2.400 8.220 5.820 -5.620 8.631 411 -411 9,062 431 431 454 6.929 -2.587 2.587 -6,929 6.929 454 E. Project valuation Total project cash flow Discount factor PV of cash flow Net present value - 17.400 1 -17,400 18,548 3,342 0.8929 2.984 9.178 0.79721 7 317 9.606 0.7118 6.837 10.053 0.6355 6.389 13,587 0.5674 7.710 9,299 0.5066 4.711