Chapter 10 - Post-class Assignment i Saved Help Save & Exit Submit Check my work 3 Blooper's analysts have come up with the following revised estimates for its magnoosium mine: 5 Range points Pessimistic Optimistic Initial investment 50% - 25% Revenues 15% + 20% Variable costs + 10% - 10% Fixed costs + 50% - 30% Working capital 50% 50% eBook Conduct a sensitivity analysis for each variable and range and compute the NPV for each. Use Spreadsheet 10.1 and accompanying Print 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.) References Project NPV Pessimistic Expected Optimistic . . ................ Initial investment Revenues Variable costs Fixed costs Working capitalA. Inputs Initial investment ($ thousands) 10,000 W N Salvage value ($ thousands) 2,000 Initial revenues ($ thousands) 15,000 UT Variable costs (% of revenues) 40.0% Initial fixed costs ($ thousands) 4,000 Inflation rate (%) 5.0% 00 Discount rate (%) 12.0% 9 Receivables (% of sales) 16.7% 10 Inventory (% of next year's costs) 15.0% 11 Tax rate (%) 21.0% 12 13 Year: 0 1 2 3 4 5 6 14 B. Fixed assets 15 Investments in fixed assets 10,000 16 Sales of fixed assets 1,580 17 Cash flow from fixed assets -10,000 1,580 18 19 C. Operating cash flow 20 Revenues 15,000 15,750 16,538 17,364 18,233 21 Variable expenses 6,000 6,300 6,615 6,946 7,293 22 Fixed expenses 4,000 4,200 4,410 4,631 4,862 23 Depreciation 2,000 2,000 2,000 2,000 2,000 24 Pretax profit 3,000 3,250 3,513 3,788 4,078 25 Tax 630 683 738 796 856 26 Profit after tax 2,370 2,568 2,775 2,993 3,221 27 Operating cash flow 4,370 4,568 4,775 4,993 5,221 28 29 D. Working capital 30 Working capital 1,500 4,075 4,279 4,493 4,717 3,039 0 31 Change in working capital 1,500 2,575 204 214 225 -1,679 -3,039 32 Cash flow from investment in working capital -1,500 -2,575 -204 -214 -225 1,679 3,039 33 0.408 0.408 0.408 0.408 0.250 34 E. Project valuation 35 Total project cash flow 11,500 1,795 4,364 4,561 4,768 6,900 4,619 36 Discount factor 1.000 0.893 0.797 0.712 0.636 0.567 0.507 37 PV of cash flow 11,500 1,603 3,479 3,246 3,030 3,915 2,340 38 Net present value 6,113.1