Finefodder’s analysts have come up with the following revised estimates for the

Question

Finefodder’s analysts have come up with the following revised estimates for the Gravenstein store: Range Pessimistic Expected Optimistic Investment $ 4,680,000 $ 3,000,000 $ 2,800,000 Sales 13,000,000 14,000,000 16,000,000 Variable costs as % of sales 78 76 74 Fixed cost $ 2,400,000 $ 2,200,000 $ 1,900,000 Assume the project life is 12 years, the tax rate is 40%, the discount rate is 8%, and the depreciation method is straight-line over the project's life. Conduct a sensitivity analysis for each variable and range and compute the NPV for each. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. Negative amounts should be indicated by a minus sign. Enter your answers in dollars, not in millions.)

Per Each Project:

Investment -

Sales -

Variable Costs as % of Sales -

Fixed Cost -

Explanation / Answer

Project I II III Investment                  46,80,000              30,00,000      28,00,000 Sales               1,30,00,000           1,40,00,000 1,60,00,000 Variable cost               1,01,40,000           1,06,40,000 1,18,40,000 Fixed cost                  24,00,000              22,00,000      19,00,000 Depreciation                     3,90,000                 2,50,000         2,33,333 PBT                        70,000                 9,10,000      20,26,667 Tax                        28,000                 3,64,000         8,10,667 PAT                        42,000                 5,46,000      12,16,000 Cash flow                     4,32,000                 7,96,000      14,49,333 year Particulars Disc factor @8% I II III 0 Investment                    1.0000     -46,80,000       -30,00,000             -28,00,000 1 Annual Cashflows                    0.9259         4,00,000           7,37,037               13,41,975 2 Annual Cashflows                    0.8573         3,70,370           6,82,442               12,42,570 3 Annual Cashflows                    0.7938         3,42,936           6,31,890               11,50,528 4 Annual Cashflows                    0.7350         3,17,533           5,85,084               10,65,303 5 Annual Cashflows                    0.6806         2,94,012           5,41,744                 9,86,392 6 Annual Cashflows                    0.6302         2,72,233           5,01,615                 9,13,326 7 Annual Cashflows                    0.5835         2,52,068           4,64,458                 8,45,672 8 Annual Cashflows                    0.5403         2,33,396           4,30,054                 7,83,030 9 Annual Cashflows                    0.5002         2,16,108           3,98,198                 7,25,028 10 Annual Cashflows                    0.4632         2,00,100           3,68,702                 6,71,322 11 Annual Cashflows                    0.4289         1,85,277           3,41,391                 6,21,594 12 Annual Cashflows                    0.3971         1,71,553           3,16,103                 5,75,550 NPV     -14,24,414         29,98,718               81,22,289

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