Corporate Finance

Cases:

Each chapter contains a “Mini-Case” that must be completed prior to the last lecture on the chapter, generally on a Friday. You must answer the questions provided and you must show your own work. A template is provided for submission, some answers require a written response (submit both.) An additional template (Master) is included with examples. These assignments are submitted through the module in Bb.

QUESTIONS:

Task: Calculating Upper and lower scenarios around a base scenario and determining the B/E unit sales. Use this sheet to report values and explanation, please attach your worksheet as well.

Part A: Assume that the solution provided in the worksheet represents the base scenario, develop an upper and lower scenario. Use the highest sales per unit (125,000 units) for all years to create the upper scenario, and use the lowest sales per unit (74,000 units) for all years to create the lower scenario. Use the following table to report your results.

Scenario | Net Present Value | IRR |

Base Scenario | $48,736,160.0000 | 57% |

Upper Scenario | $75,321,560.0000 | 78% |

Lower Scenario | $21,087,344.0000 | 34% |

Part B: Calculate the Break Even’s (Accounting, Cash, and Financial) for each scenario. Use the following table to report your results.

Scenario | Accounting B/E | Cash B/E | Financial B/E |

Base Scenario | $22,441.73 | $17,966.10 | $54,170.18 |

Upper Scenario | $42,779.66 | $20,338.98 | $56,543.06 |

Lower Scenario | $39,389.83 | $16,949.15 | $53,153.23 |

Part C: Give a brief explanation of your perception of the project based on your analysis above. 

Because the majority of my scenarios have positive NPVs, then I can feel reasonably comfortable about accepting the project.

And this project is also can break-even on accounting basis, then it is going to be a worthwhile project.