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corp_Ch11_09

# corp_Ch11_09 - (All anlyses are based on the Scooter...

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WEEK I I (All anlyses are based on the Scooter example in Chapte 11) Break-Even Analysis Sensitivity Analysis   Value of Information Value of Information (2) - imperfect study  ( optional) Monte-Carlo Simulation Frequency Distrubution of NPV from the Monte-Carlo  Simulation The Abandonment Option from the simulation Decision Trees and the abandonment option

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Millions of Yen Expected Other Base variables Values  Scenarios Unit sales 0.100 0 0.2 unit price 0.375 0.375 0.375 unit variable cost 0.300 0.300 0.300 fixed cost 3000.000 3000.000 3000.000 Proforma P&L Revenues 37500 0 75000 Variable cost 30000 0 60000 Fixed cost 3000 3000 3000 Copy for graph Depreciation 1500 1500 1500 Unit sales PV (Inflows) PV(Outflows) Pre-tax profit 3000 -4500 10500 0 0 19608 Tax 1500 -2250 5250 0.1 230421 226988 Net profit 1500 -2250 5250 0.2 460843 434367 Operating CF 3000 -750 6750 Investment 15000 15000 15000 PV (Inflows) 230421 0 460843 PV(Outflows) 226988 19608 434367 NPV 3434 -19608 26476 Solve for NPV BE Q(BE)=0.1*19608/(19608+3434)= 0.085098 million Accounting BE from lines 3 and 14 Q(BE)=0.1*2250/(2250+1500) 0.060000 million "Fixing" the accounting BE EAC of investement using PMT function 2,441.18  (million Yen) Adjusting line 14 "net profit" 558.82  (3,191.18) 4,308.82  Q(BE) 0.085098 (milloin Yen) This table is based on the expected values fro worksheet and the sales figures given in Table Check the cells that show PV of inflows, outflo The graph shows the BE NPV  and the exact c (by interpolation).  Produce a similar graph for Table 10.5 and see that this BE point is differe -0.04 0.01 0.06 -100000 0 100000 200000 300000 400000 500000 NPV Break  P Unit sales in PV and NPV in million Yen

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NPV This means we assume the firm can charge losses against profits fro -19608 3434 26476 I – T*pv(0.1,10,–I/10) Using formula Q(NPV BE) =  ------------------------------ (1–T)* pv(0.1,10,vc–p) \$85,098.16 Note:   CF from deprectiation appears in NPV also in scenarios where om the sensitivity analysis  e 10.4. ows and NPV. calculation is shown to the left of it  r profit BE based on the figures in  ent from  the NPV BE point.  0.11 0.16 0.21  Even PV (Inflows) PV(Outflows) NPV n millions
om other projects.  e pre-tax profits are negative.

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Millions of Yen/uni Expected Sensitivity to Market size Sensitivity to market shareSensitivity to Unit price Base variables Values  +20 percent  -20 percent  +20 percent  -20 percent  +20 percent  -20 percent Sensitivity factor 1.20 0.80 1.20 0.80 1.20 0.80 market size (units) 1.000 1.2 0.8 1.000 1.000 1.000 1.000 market share 0.100 0.100 0.100 0.12 0.08 0.100 0.100 unit price 0.375 0.375 0.375 0.375 0.375 0.45 0.3 unit variable cost 0.300 0.300 0.300 0.300 0.300 0.300 0.300 fixed cost 3000 3000 3000 3000 3000 3000 3000 Proforma P&L Revenues 37500 45000 30000 45000 30000 45000 30000 Variable cost 30000 36000 24000 36000 24000 30000 30000 Fixed cost 3000 3000 3000 3000 3000 3000 3000 Depreciation 1500 1500 1500 1500 1500 1500 1500 Pre-tax profit 3000 4500 1500 4500 1500 10500 -4500 Tax (50%) 1500 2250 750 2250 750 5250 -2250 Net profit 1500 2250 750 2250 750 5250 -2250 Operating CF 3000 3750 2250 3750 2250 6750 -750 Investment 15000 15000 15000 15000 15000 15000 15000 NPV 3433.701 8042.127 -1174.724 8042.127 -1174.724 26475.828 -19608.425 The basis for this exercise is the Scooter example in Tables 10.1 and This means we assume the firm can charge losses against profits fro Note:   CF from deprectiation appears in NPV also in scenarios where This sensitivity analysis is different from the example in the text only in the degree of sensitivity allowed.  Each
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corp_Ch11_09 - (All anlyses are based on the Scooter...

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