A. For a project being considered for SK Electronics evaluate whether it should be undertaken using NPV method. (5 Marks) B. Create Scenario analysis and discuss success of the project with computation and analysis of Expected NPV, Standard Deviation and Coefficient of variation. (5 Marks) All amounts in Rs'000 Investment 50,000 10 Sales Volume in units 2,000 11 Price 20 12 Variable cost 8 13 Fixed Cost 5,000 14 Depreciation WDV (on investments) 25% 15 Income Tax 30% 16 Discount Rate for NPV 11% 17 18 Cashflows 19 Year 0 2 3 4 5 16 20 Sales 40,000.00 40,000.00 40,000.00 40,000.00 40,000.00 40,000.00 40,000.00 21 Variable Cost 16,000.00 16,000.00 16,000.00 16,000.00 16,000.00 16,000.00 16,000.00 22 Fixed Cost 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 23 EBDIT 19,000.00 19,000.00 19,000.00 19,000.00 19,000.00 19,000.00 19,000.00 24 Investment Value 50,000.00 37,500.00 28,125.00 21,093.75 15,820.31 11,865.23 8,898.93 0.00 25 Depreciation 12,500.00 9,375.00 7,031.25 5,273.44 3,955.08 2,966.31 8,898.93 26 EBIT 6,500.00 9,625.00 11,968.75 13,726.56 15,044.92 16,033.69 10,101.07 27 Tax 1,950.00 2,887.50 3,590.63 4,117.97 4,513.48 4,810.11 3,030.32 28 PAT 4,550.00 6,737.50 8,378.13 9,608.59 10,531.45 11,223.58 7,070.75 29 Cashflows -50,000.00 17,050. 16,112.50 15,409.38 14,882.03 14,486.52 14,189.89 15,969.68 30 31 32 33 For Scnario analysis 34 35 Key Variables Pessimistic Optimistic | Expected 36 Sales Volume in units 1,000.00 3,000.00 2,000.00 37 Price 15.00 25.00 20.00 38 Variable cost 10.00 7.00 8.00 39 Fixed Cost 6,000.00 4,000.00 5,000.00 40 Probability 0.25 0.25 0.50 41