1. Use the information provided to create optimistic, realistic, and pessimistic scenarios for this project.Your Income Statements need to take the proper form.
2. Assume all cash flows remain constant for 5 years.Calculate NPV for this project using both TVM concepts and the NPV function in Excel.
3. Use the What If function of Excel to make a Sensitivity Analysis for both unit price and variable costs.
4. Assume all cash flows remain constant for 5 years.Calculate NPV for this project with your new sensitivity numbers.
5. Explain what the numbers tell you about the viability of this project.

Assumptions Optimistic Realistic Pessimistic Units 5,000 4,500 4,000 Sales Price $95.00 $90.00 $85.00 Variable Costs $60.00 $64.00 $68.00 Depreciation $10,000 $10,000 $10,000 Fixed Costs $25,000 $25,000 $25,000 Tax Rate 25.00% 25.00% 25.00% Assumption: Cash Flows remain the same for all 5 years Scenario Analysis Optimistic Sales Variable Costs Gross Profit Depreciation Fixed Costs EBIT Interest Expense Taxable Income Taxes Net Income Periods 0 1 2 3 4 5 NPV Cash Flows -$200,000WACC 12.00% Realistic Sales Variable Costs Gross Profit Depreciation Fixed Costs EBIT Interest Expense Taxable Income Taxes Net Income Periods 0 2 3 4 5 NPV Cash Flows $200,000 WACC 12.00% Pessimistic Sales Variable Costs Gross Profit Depreciation Fixed Costs EBITSales Variable Costs Gross Profit Depreciation Fixed Costs EBIT Interest Expense Taxable Income Taxes _- _ _ Cash Flows -$200,000 _-_ WAcc 12.00% _- _ _