FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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spreadsheet 10.1

Blooper's analysts have come up with the following revised estimates for its magnoosium mine:
Range
Initial investment
Revenues
Variable costs
Fixed cost
Working capital
Initial investment
Pessimistic Optimistic
+45%
Revenues
Variable costs
Fixed costs
Working capital
- 15%
+ 25%
+ 20%
+ 20%
Conduct a sensitivity analysis for each variable and range and compute the NPV for each. Use Spreadsheet 10.1 and
accompanying data as a starting point for the analysis. (Do not round intermediate calculations. Negative
amounts should be indicated by a minus sign. Enter your answers in thousands rounded to the nearest whole
dollar.)
25%
+ 25%
- 25%
- 25%
30%
Pessimistic
Project NPV
Expected
Optimistic
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Transcribed Image Text:Blooper's analysts have come up with the following revised estimates for its magnoosium mine: Range Initial investment Revenues Variable costs Fixed cost Working capital Initial investment Pessimistic Optimistic +45% Revenues Variable costs Fixed costs Working capital - 15% + 25% + 20% + 20% Conduct a sensitivity analysis for each variable and range and compute the NPV for each. Use Spreadsheet 10.1 and accompanying data as a starting point for the analysis. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Enter your answers in thousands rounded to the nearest whole dollar.) 25% + 25% - 25% - 25% 30% Pessimistic Project NPV Expected Optimistic
A. Inputs
Initial investment ($ thousands)
Salvage value ($ thousands)
Initial revenues ($ thousands)
Variable costs (% of revenues)
Initial fixed costs ($ thousands)
Inflation rate (%)
Discount rate (%)
Receivables (% of sales)
Inventory (% of next year's costs)
Tax rate (%)
B. Fixed assets
Investments in fixed assets
Sales of fixed assets
Cash flow from fixed assets
C. Operating cash flow
Revenues
Variable expenses
Fixed expenses
Depreciation
Pretax profit
Tax
Profit after tax
Operating cash flow
D. Working capital
Working capital
Change in working capital
Cash flow from investment in working capital
E. Project valuation
Total project cash flow
Discount factor
PV of cash flow
Net present value
Year:
10,000
2,000
15,000
40.0%
4,000
5.0%
12.0%
16.7%
15.0%
21.0%
0
10,000
-10,000
1,500
1,500
-1,500
1
15,000
6,000
4,000
2,000
3,000
630
2,370
4,370
4,075
2,575
-2,575
0.408
1,795
0.893
2
15,750 16,538
6,300
6,615
4,200
4,410
2,000
2,000
3,250
3,513
683
738
2,568
4,568
4,279
204
-204
0.408
-11,500
4,364
1.000
0.797
-11,500 1,603 3,479
6,113.1
3
2,775
4,775
4,493
214
-214
0.408
4,561
0.712
3,246
4
17,364
6,946
4,631
2,000
3,788
796
2,993
4,993
4,717
225
-225
0.408
4,768
0.636
3,030
5
18,233
7,293
4,862
2,000
4,078
856
3,221
5,221
3,039
-1,679
1,679
0.250
6,900
0.567
3,915
6
1,580
1,580
0
-3,039
3,039
4,619
0.507
2,340
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Transcribed Image Text:A. Inputs Initial investment ($ thousands) Salvage value ($ thousands) Initial revenues ($ thousands) Variable costs (% of revenues) Initial fixed costs ($ thousands) Inflation rate (%) Discount rate (%) Receivables (% of sales) Inventory (% of next year's costs) Tax rate (%) B. Fixed assets Investments in fixed assets Sales of fixed assets Cash flow from fixed assets C. Operating cash flow Revenues Variable expenses Fixed expenses Depreciation Pretax profit Tax Profit after tax Operating cash flow D. Working capital Working capital Change in working capital Cash flow from investment in working capital E. Project valuation Total project cash flow Discount factor PV of cash flow Net present value Year: 10,000 2,000 15,000 40.0% 4,000 5.0% 12.0% 16.7% 15.0% 21.0% 0 10,000 -10,000 1,500 1,500 -1,500 1 15,000 6,000 4,000 2,000 3,000 630 2,370 4,370 4,075 2,575 -2,575 0.408 1,795 0.893 2 15,750 16,538 6,300 6,615 4,200 4,410 2,000 2,000 3,250 3,513 683 738 2,568 4,568 4,279 204 -204 0.408 -11,500 4,364 1.000 0.797 -11,500 1,603 3,479 6,113.1 3 2,775 4,775 4,493 214 -214 0.408 4,561 0.712 3,246 4 17,364 6,946 4,631 2,000 3,788 796 2,993 4,993 4,717 225 -225 0.408 4,768 0.636 3,030 5 18,233 7,293 4,862 2,000 4,078 856 3,221 5,221 3,039 -1,679 1,679 0.250 6,900 0.567 3,915 6 1,580 1,580 0 -3,039 3,039 4,619 0.507 2,340
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