E.

Sensitivities and Scenarios

The table below illustrates the effect on net income if the percentage of

market share will be changed. This change has a direct effect on total revenue, total

variable costs, and income tax expense, while everything else remains unchanged.  
Pessimistic: (Market Share=
2021 2022 2023 2024 2025
50%)
Total Revenue 5,827,725.13 6,002,238.43 6,183,120.82 6,367,824.68 6,558,897.64
Total Variable Cost -2,169,821.30 -2,234,797.37 -2,302,144.83 -2,370,915.12 -2,442,056.80
Total Fixed Cost -2,434,993.69 -2,455,236.91 -2,470,298.23 -2,478,429.10 -2,498,379.19
Total Operating Profit 1,222,910.14 1,312,204.15 1,410,677.76 1,518,480.46 1,618,461.64
Interest Expense -192,000.00 -192,000.00 -192,000.00 -192,000.00 -192,000.00
Profit Before Tax 1,030,910.14 1,120,204.15 1,218,677.76 1,326,480.46 1,426,461.64
Income Tax Expense -257,727.53 -280,051.04 -304,669.44 -331,620.11 -356,615.41
Net Income 773,182.60 840,153.11 914,008.32 994,860.34 1,069,846.23

Expected: (Market Share =

2021 2022 2023 2024 2025
80%)

Total Revenue 9,323,088.38 9,603,326.68 9,892,483.79 10,188,009.96 10,493,726.69

Total Variable Cost -3,471,240.60 -3,575,580.92 -3,683,242.02 -3,793,274.48 -3,907,101.18
Total Fixed Cost -2,434,993.69 -2,455,236.91 -2,470,298.23 -2,478,429.10 -2,498,379.19
Total Operating Profit 3,416,854.09 3,572,508.85 3,738,943.54 3,916,306.38 4,088,246.32
Interest Expense -192,000.00 -192,000.00 -192,000.00 -192,000.00 -192,000.00
Profit Before Tax 3,224,854.09 3,380,508.85 3,546,943.54 3,724,306.38 3,896,246.32
Income Tax Expense -806,213.52 -845,127.21 -886,735.89 -931,076.59 -974,061.58
Net Income 2,418,640.57 2,535,381.64 2,660,207.66 2,793,229.78 2,922,184.74

Optimistic: (Market Share =

2021 2022 2023 2024 2025
100%)

Total Revenue 11,654,176.44 12,004,476.85 12,364,967.83 12,735,649.36 13,117,795.27

Total Variable Cost -4,339,168.32 -4,469,594.74 -4,603,815.38 -4,741,830.24 -4,884,113.61
Total Fixed Cost -2,434,993.69 -2,455,236.91 -2,470,298.23 -2,478,429.10 -2,498,379.19
Total Operating Profit 4,880,014.42 5,079,645.20 5,290,854.22 5,515,390.02 5,735,302.47
Interest Expense -192,000.00 -192,000.00 -192,000.00 -192,000.00 -192,000.00
Profit Before Tax 4,688,014.42 4,887,645.20 5,098,854.22 5,323,390.02 5,543,302.47
Income Tax Expense -1,172,003.61 -1,221,911.30 -1,274,713.55 -1,330,847.50 -1,385,825.62
Net Income 3,516,010.82 3,665,733.90 3,824,140.66 3,992,542.51 4,157,476.85

As illustrated, if the expected market share of 80% is reduced to a pessimistic

rate of 50%, the net income decreases by 68%. Conversely, if the market share is

raised to an optimistic rate of 100%, the net income increases by almost half or 45%.

Note that these figures are ballpark estimates, with the differing market shares as

the driver.
 Financial Model
0 1 2 3 4 5
Revenues 9,323,088 9,603,327 9,892,484 10,188,010 10,493,727
Less: OPEX -5,906,234 -6,030,818 -6,153,540 -6,271,704 -6,405,480
EBIT 3,416,854 3,572,509 3,738,944 3,916,306 4,088,246
Interest -192,000 -192,000 -192,000 -192,000 -192,000
Taxes -806,214 -845,127 -886,736 -931,077 -974,062
CAPEX -3,600,000
Profits After
-3,600,000 2,418,641 2,535,382 2,660,208 2,793,230 2,922,185
Tax
Add:
81,394 81,394 81,394 81,394 81,394
Depreciation

Net Cash Flows -3,600,000 2,500,035 2,616,776 2,741,602 2,874,624 3,003,579

Terminal Value 0.03 100,077,659

NCF - Firm -3,600,000 2,500,035 2,616,776 2,741,602 2,874,624 103,081,237

Enterprise Value 72,567,040

Outstanding
-2,400,000
Loans
Equity Value 70,167,040
IRR 128.21%

WACC Enterprise Value Scenarios

7.30% P72,567,039.67
8.30% P68,676,349.56
9.30% P65,025,515.96
10.30% P61,597,701.87

Other figures dependent on the cost of capital are presented in the table above.

The Enterprise Value Scenarios show that the higher the cost of capital is, the lower the

enterprise value becomes. There can also be other scenarios that can be developed

whose occurrences or possibility of occurrences are dependent on other different

internal and external factors, such as capital and operating expenditures, changes in

operations, and uncontrollable risks.