a. filling partially filled out scenario inputs:
sales units best case: +10%*300 = 30, total sales units best case= 300+30 =330
Fixed cost best case: -10%*328000 = 32800, total fixed cost best case = 328000-32800 = 295200
cost/unit worst case: -10%*15700=1570, total cost/unit worst case = 15700+1570 = 17270
Note: cost gets added for worst case, and costs gets reduced for best case.
the scenario table would be as follows:
scenario | units | price/unit | cost/unit | fixed cost |
best(+10%) | 330 | 19200 | 14130 | 295200 |
base | 300 | 19200 | 15700 | 328000 |
worst(-10%) | 270 | 19200 | 17270 | 360800 |
operational cash flows formula= (sales -cost -depreciation)*(1-T) + Depreciation
here, depreciation = (982000-0)/4 = 245500 per yr
for best case: sales price = 330*19200 = 6336000
total cost = 330*14130 + 295200 = 4958100
A.OCF for best case = (6336000-4958100-245500)*(1-0.4) + 245500 = 924940
B.similarly for OCF for worst case = (5184000-5023700-245500)*(1-0.4) + 245500 = 194380
NPV = -intial investment + OCF/(1+r)^n , here n =4, r = 12%, initial investment = 982000, OCF is given above for each of the four yrs,
D.NPV for best case = -982000+ (924940/1.12^1) +(924940/1.12^2) +...….(924940/1.12^4) = -1827365.9
C.NPV for worst case = -928000+ (194380/1.12^1)………(194380/1.12^4) = -391600.03
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