Please use Excel and upload the excel file and copy the link so I can download i
ID: 2766279 • Letter: P
Question
Please use Excel and upload the excel file and copy the link so I can download it
The most likely cash flow estimates for a new equipment being considered for immediate installation are as follows: Capital Investment $11,500 Revenue/year $5,000 Revenue increase per year $100 Expenses/year $2,000 Expense increase per year 20% Salvage value $1,000 Useful life 6 years There is uncertainty of the value of the initial investment (I) and the net annual cash flow (A). Perform sensitivity analysis to determine the effects on the economic feasibility due to the errors in the original estimates. Perform the sensitivity using (-30%, 0%, and +30%)Explanation / Answer
Sensitive Analysis 1: at -30%
Year
Cash outflow
Cash inflow
Net cash flow
Sensitive cash flow
PVF @ 10%
Discounted Net cash flow
0
11,500.00
-
(11,500.00)
(8,050.00)
1.00
(8,050.00)
1
2,000.00
5,000.00
3,000.00
2,100.00
0.9091
1,909.09
2
2,400.00
5,100.00
2,700.00
1,890.00
0.8264
1,561.98
3
2,880.00
5,200.00
2,320.00
1,624.00
0.7513
1,220.14
4
3,456.00
5,300.00
1,844.00
1,290.80
0.6830
881.63
5
4,147.20
5,400.00
1,252.80
876.96
0.6209
544.52
6
4,976.64
5,500.00
523.36
366.35
0.5645
206.80
Feasibility
(1,725.84)
Sensitive Analysis 2: at 0%
Year
Cash outflow
Cash inflow
Net cash flow
PVF @ 10%
Discounted Net cash flow
0
11,500.00
-
(11,500.00)
1.00
(11,500.00)
1
2,000.00
5,000.00
3,000.00
0.9091
2,727.27
2
2,400.00
5,100.00
2,700.00
0.8264
2,231.40
3
2,880.00
5,200.00
2,320.00
0.7513
1,743.05
4
3,456.00
5,300.00
1,844.00
0.6830
1,259.48
5
4,147.20
5,400.00
1,252.80
0.6209
777.89
6
4,976.64
5,500.00
523.36
0.5645
295.42
Feasibility
(2,465.48)
Sensitive Analysis 3: at 30%
Year
Cash outflow
Cash inflow
Net cash flow
Sensitive cash flow
PVF @ 10%
Discounted Net cash flow
0
11,500.00
-
(11,500.00)
(14,950.00)
1.00
(14,950.00)
1
2,000.00
5,000.00
3,000.00
3,900.00
0.9091
3,545.45
2
2,400.00
5,100.00
2,700.00
3,510.00
0.8264
2,900.83
3
2,880.00
5,200.00
2,320.00
3,016.00
0.7513
2,265.97
4
3,456.00
5,300.00
1,844.00
2,397.20
0.6830
1,637.32
5
4,147.20
5,400.00
1,252.80
1,628.64
0.6209
1,011.26
6
4,976.64
5,500.00
523.36
680.37
0.5645
384.05
Feasibility
(3,205.13)
Sensitive Analysis 1: at -30%
Year
Cash outflow
Cash inflow
Net cash flow
Sensitive cash flow
PVF @ 10%
Discounted Net cash flow
0
11,500.00
-
(11,500.00)
(8,050.00)
1.00
(8,050.00)
1
2,000.00
5,000.00
3,000.00
2,100.00
0.9091
1,909.09
2
2,400.00
5,100.00
2,700.00
1,890.00
0.8264
1,561.98
3
2,880.00
5,200.00
2,320.00
1,624.00
0.7513
1,220.14
4
3,456.00
5,300.00
1,844.00
1,290.80
0.6830
881.63
5
4,147.20
5,400.00
1,252.80
876.96
0.6209
544.52
6
4,976.64
5,500.00
523.36
366.35
0.5645
206.80
Feasibility
(1,725.84)
Sensitive Analysis 2: at 0%
Year
Cash outflow
Cash inflow
Net cash flow
PVF @ 10%
Discounted Net cash flow
0
11,500.00
-
(11,500.00)
1.00
(11,500.00)
1
2,000.00
5,000.00
3,000.00
0.9091
2,727.27
2
2,400.00
5,100.00
2,700.00
0.8264
2,231.40
3
2,880.00
5,200.00
2,320.00
0.7513
1,743.05
4
3,456.00
5,300.00
1,844.00
0.6830
1,259.48
5
4,147.20
5,400.00
1,252.80
0.6209
777.89
6
4,976.64
5,500.00
523.36
0.5645
295.42
Feasibility
(2,465.48)
Sensitive Analysis 3: at 30%
Year
Cash outflow
Cash inflow
Net cash flow
Sensitive cash flow
PVF @ 10%
Discounted Net cash flow
0
11,500.00
-
(11,500.00)
(14,950.00)
1.00
(14,950.00)
1
2,000.00
5,000.00
3,000.00
3,900.00
0.9091
3,545.45
2
2,400.00
5,100.00
2,700.00
3,510.00
0.8264
2,900.83
3
2,880.00
5,200.00
2,320.00
3,016.00
0.7513
2,265.97
4
3,456.00
5,300.00
1,844.00
2,397.20
0.6830
1,637.32
5
4,147.20
5,400.00
1,252.80
1,628.64
0.6209
1,011.26
6
4,976.64
5,500.00
523.36
680.37
0.5645
384.05
Feasibility
(3,205.13)