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Blooper's analysts have come up with the following revised estimates for its magh Range Initial investment Revenues Variable costs Fixed cost Working capital Pessimistic Optimistic +45% - 15% -25% + 25% 25% -25% 30% + 25% + 20% + 20% -

Blooper's analysts have come up with the following revised estimates for its magh Range Initial investment Revenues Variable costs Fixed cost Working capital Pessimistic Optimistic +45% - 15% -25% + 25% 25% -25% 30% + 25% + 20% + 20% -

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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
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
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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