Question: You are tasked with presenting a forecast scenario analysis to the board of directors at Bentleys Sorell Pty Ltd as the company considers changing its

 You are tasked with presenting a forecast scenario analysis to the
board of directors at Bentleys Sorell Pty Ltd as the company considers
changing its business model. Scenario Comparison ($) Initial Annual Net Annual Cash
NPV Investment Income Flow Scenario A 2,000,000 545, 100 675,000 Scenario B

You are tasked with presenting a forecast scenario analysis to the board of directors at Bentleys Sorell Pty Ltd as the company considers changing its business model. Scenario Comparison ($) Initial Annual Net Annual Cash NPV Investment Income Flow Scenario A 2,000,000 545, 100 675,000 Scenario B 2,000,000 426,995 -493,005 -3,777,184 Scenario C 2,000,000 1,644,385 2,564,385 7,244,095 Expected interest rate: 12% Forecasting period: 5 years PV annuity factor: 3.6048 Using the information provided, answer the following questions: Q4.1 Calculate Net present value (NPV) for scenario A? If the projected NPV cash flow is positive, does this guarantee that the new company strategy will work? (5 marks] iet T Q4.2 Categorize the scenarios. And if the projected cash flow is positive in the base case, should the company take the risk of investing in creating its own streaming service? [5 marks] Q4.3 How does scenarios analysis differ from sensitivity analysis? [5 marks]

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!