a) Develop a spreadsheet model and use it to find the projects NPV, IRR, and payback.
b) Conduct a scenario analysis to determine the sensititity of NPV to changes in

sales price
number of units sold
variable cost per unit
fixed cost
cost of captital.
Set these variables at 10% above and 10% below
their base-case scenario, please include a grahph in your analysis.

  

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JD Sdn Bhd has developed a new industrial detergent that can be used in motor vehicle garages. It would cost RM 1,000,000.00 to buy the equipment necessary to manufacture the blenders, and initially, it would require net operating working capital equal to 15% of the 1st year sales amount. Net operating working capital will remain at the same rate. The project would have a life of years. If the project is undertaken, it must be continued for the entire years. The firm believes it could sell The detergents would sell for RM The variable cost is 5.00 and will increase at an inflation rate of 5 5 After the first year, JD wants to increase the sales price by The company's fixed cost would be at RM and would also increase by 100,000 units per year 12.00 per unit 12% 3% annualy. 420,000.00 at year 1 3% annually. per unit 3% annually. The equipment would be depreciated over a 5.00 year period, using the straight line method. The annual depreciation will be calculated on a salvage value of the equipment at the end of the project's life of RM 200,000.00 The company, however, estimateed the machine can be sold as scrap for RM The corporate tax rate is 25% The cost of capital is 250,000.00 JD Sdn Bhd has developed a new industrial detergent that can be used in motor vehicle garages. It would cost RM 1,000,000.00 to buy the equipment necessary to manufacture the blenders, and initially, it would require net operating working capital equal to 15% of the 1st year sales amount. Net operating working capital will remain at the same rate. The project would have a life of years. If the project is undertaken, it must be continued for the entire years. The firm believes it could sell The detergents would sell for RM The variable cost is 5.00 and will increase at an inflation rate of 5 5 After the first year, JD wants to increase the sales price by The company's fixed cost would be at RM and would also increase by 100,000 units per year 12.00 per unit 12% 3% annualy. 420,000.00 at year 1 3% annually. per unit 3% annually. The equipment would be depreciated over a 5.00 year period, using the straight line method. The annual depreciation will be calculated on a salvage value of the equipment at the end of the project's life of RM 200,000.00 The company, however, estimateed the machine can be sold as scrap for RM The corporate tax rate is 25% The cost of capital is 250,000.00