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B 1 Goal Kick Sports New Store Financial Model 2 Parameters 3 4 Store Size (square feet) 7,500 5 Total Fixed Assets $ 280,000 6 Straight Line Depreciation period 5 7 Discount Rate 10% 8 Tax Rate 33% 9 Inflation Rate 2% 10 Cost of Merchandise % of sales) 28% 11 12 First Year Sales Revenue $ 950,000 13 Annual Growth Rate of Sales 15% 14 15 Operating Expenses 16 Rent Per Square Foot $ 30 17 Labor Cost $ 150,000 18 Other Expenses $ 235,000 19 1 4 5 Year Sales Revenue 2 $1,092,500 3 $1,256,375 $950,000 $1,444,831 $1,661,556 19 20 Model 21 22 23 24 25 26 27 Cost of Merchandise Labor Cost Rent Other Expenses $266,000 $150,000 $225,000 $235,000 $305,900 $153,000 $299,250 $239,700 $351,785 $156,060 $398,003 $244,494 $404,553 $159,181 $529,343 $249,384 $465,236 $162,365 $704,027 $254,372 28 Net Operating Income Depreciation Expense $74,000 $56,000 $94,650 $56,000 $106,034 $56,000 $102,370 $56,000 $75,557 $56,000 Net Income Before Tax Income Tax $18,000 $5,940 $38,650 $12,755 $50,034 $16,511 $46,370 $15,302 $19,557 $6,454 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 Net After Tax Income Plus Depreciation Expense Annual Cash Flow $12,060 $56,000 $68,060 $25,896 $56,000 $81,896 $33,522 $56,000 $89,522 $31,068 $56,000 $87,068 $13,103 $56,000 $69,103 Discounted Cash Flow $61,873 $67,682 $67,260 $59,469 $42,908 Total Discounted Cash Flow $299,191 DATAFile: Goalkick Goal Kick Sports (GKS) is a retail chain that sells youth and adult soccer equipment. The GKS financial planning group has developed a spreadsheet model to calculate the net discounted cash flow of the first five years of operations for a new store. This model is used to assess new locations under consideration for expansion. (a) Use Excel's Formula Auditing tools to audit this model and correct any errors found. What is the total discounted cash flow (in dollars) calculated by the corrected spreadsheet. (Round you answer to the nearest dollar.) $ (b) Once you are comfortable that the model is correct, use Scenario Manager to generate a Scenario Summary report that gives Total Discounted Cash Flow for the following scenarios. Scenario 1 2 3 4 Tax Rate 32% 24% 37% 26% Inflation Rate 1% 3% 4% 2% Annual Growth of Sales 22% 160 16% 8% 14% What is the range of values for the Total Discounted Cash Flow (in dollars) for these scenarios? (Round your answer to the nearest dollar.) $ B 1 Goal Kick Sports New Store Financial Model 2 Parameters 3 4 Store Size (square feet) 7,500 5 Total Fixed Assets $ 280,000 6 Straight Line Depreciation period 5 7 Discount Rate 10% 8 Tax Rate 33% 9 Inflation Rate 2% 10 Cost of Merchandise % of sales) 28% 11 12 First Year Sales Revenue $ 950,000 13 Annual Growth Rate of Sales 15% 14 15 Operating Expenses 16 Rent Per Square Foot $ 30 17 Labor Cost $ 150,000 18 Other Expenses $ 235,000 19 1 4 5 Year Sales Revenue 2 $1,092,500 3 $1,256,375 $950,000 $1,444,831 $1,661,556 19 20 Model 21 22 23 24 25 26 27 Cost of Merchandise Labor Cost Rent Other Expenses $266,000 $150,000 $225,000 $235,000 $305,900 $153,000 $299,250 $239,700 $351,785 $156,060 $398,003 $244,494 $404,553 $159,181 $529,343 $249,384 $465,236 $162,365 $704,027 $254,372 28 Net Operating Income Depreciation Expense $74,000 $56,000 $94,650 $56,000 $106,034 $56,000 $102,370 $56,000 $75,557 $56,000 Net Income Before Tax Income Tax $18,000 $5,940 $38,650 $12,755 $50,034 $16,511 $46,370 $15,302 $19,557 $6,454 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 Net After Tax Income Plus Depreciation Expense Annual Cash Flow $12,060 $56,000 $68,060 $25,896 $56,000 $81,896 $33,522 $56,000 $89,522 $31,068 $56,000 $87,068 $13,103 $56,000 $69,103 Discounted Cash Flow $61,873 $67,682 $67,260 $59,469 $42,908 Total Discounted Cash Flow $299,191 DATAFile: Goalkick Goal Kick Sports (GKS) is a retail chain that sells youth and adult soccer equipment. The GKS financial planning group has developed a spreadsheet model to calculate the net discounted cash flow of the first five years of operations for a new store. This model is used to assess new locations under consideration for expansion. (a) Use Excel's Formula Auditing tools to audit this model and correct any errors found. What is the total discounted cash flow (in dollars) calculated by the corrected spreadsheet. (Round you answer to the nearest dollar.) $ (b) Once you are comfortable that the model is correct, use Scenario Manager to generate a Scenario Summary report that gives Total Discounted Cash Flow for the following scenarios. Scenario 1 2 3 4 Tax Rate 32% 24% 37% 26% Inflation Rate 1% 3% 4% 2% Annual Growth of Sales 22% 160 16% 8% 14% What is the range of values for the Total Discounted Cash Flow (in dollars) for these scenarios? (Round your answer to the nearest dollar.) $