Sensitivity Analysis Excel Template

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The expected Cash Flow forecast for the next 12 years is provided (see below). The cost of capital is 8% ,
assuming the variables remain constant, determine the Net Present Value (NPV) of the project.

0th Year- During the 1st year of Investment Years 1st - 12th
Investment ($5,400.00)
Sales $16,000.00
Variable Costs $13,000.00
Fixed Costs $2,000.00
Depreciation $450.00
Pretax Profit $550.00
Taxes@40% $220.00
Profit After Tax $330.00
Operating Cash flow $780.00

Net Cash Flow ($5,400.00) $780.00

NPV $470.25

Possible Outcomes

Variable Pessimistic Expected

Investment 5800 5400
Sales 14000 16000
Variable Costs 11620 which is 83% of Sales 13000 which is 80.25% of Sales
Fixed Costs 2100 2000
NPV ($121.00) $470.25
 Optimistic
5000
18000
14400 which is 80% of Sales
1900
$778.00
Example of J&B Inc. The original or expected Sales Volume is $582,401 arising out of 7882 units and at the rate of $73.89.To
conducted two models with different input variables for the Pessimistic Model and the Optimistic Model, as seen highlighte

Pessimistic Expected
20% Decrease in Sales Original Sales
Sales:
Units $6,305.60 $7,882.00
Selling Price per Unit $73.89 $73.89
Total Sales $465,920.78 $582,400.98
Variable Costs:
Cost of Goods Sold $104,152.80 $130,191.00
Fixed Costs (Operating Costs) :
Advertising Expense  $130,000.00 $130,000.00
Wages & Employee Benefits  $122,366.00 $122,366.00
Casual Labor  $2,400.00 $2,400.00
Office Supplies  $1,500.00 $1,500.00
Rent Expense  $12,000.00 $12,000.00
Telephone/Fax Expense  $3,600.00 $3,600.00
Professional Services  $7,000.00 $7,000.00
Insurance Expenses  $1,500.00 $1,500.00
Toll-free above Variable  $15,685.00 $15,685.00
Bad Debt Expense  $5,824.00 $5,824.00
Interest on Operating Loan  $2,000.00 $2,000.00
Internet Storage & Accounts  $2,550.00 $2,550.00
Miscellaneous Expenses  $2,400.00 $2,400.00
Depreciation Exp. - Equipment  $3,142.00 $3,142.00
Depreciation Exp.- Furniture  $606.00 $606.00
Amortization of Initial R&D Costs  $15,924.00 15924
Amortization of Future R&D Costs  $24,720.00 $24,720.00
Total Fixed Costs $353,217.00 $353,217.00
Total Costs ( Variable & Fixed) $457,369.80 $483,408.00
Net Income Before Taxes $8,550.98 $98,992.98
Less: Estimated Tax Payable @ 30% $2,565.30 $29,697.89
Net Income After Taxes $5,985.69 $69,295.09
of 7882 units and at the rate of $73.89.To conduct the sensitivity analysis – J&B Inc
d the Optimistic Model, as seen highlighted below:

Optimistic
15 % Increase in Sales

$9,064.30
$73.89
$669,761.13

$149,719.65

$130,000.00
$122,366.00
$2,400.00
$1,500.00
$12,000.00
$3,600.00
$7,000.00
$1,500.00
$15,685.00
$5,824.00
$2,000.00
$2,550.00
$2,400.00
$3,142.00
$606.00
$15,924.00
$24,720.00
$353,217.00
$502,936.65
$166,824.48
$50,047.34
$116,777.13