Advanced Corporate

Finance Final Project

Presenters:
Waseem Akbar
Ahmed khan
Aakash Ahmed Memon
Sensitivity Analysis Case

Case Scenario:
Research and Rs. 800,000
development Cost
Plant building Rs. 1,000,000
Machinery and Rs. 16,000,000
Equipment Cost
Total Initial Investment Rs. 17,800,000
 Data
Variables Actual Deviation Deviation
(Positive) (Negative)
Deviation from 0 25% -25%
Actual
Price per unit 40,000 50000 30000
Unit Sales per 140 175 105
year
Variable Cost 28000 35000 21000
Fixed Cost 1,546,00 1932500 1159500
0
Expected Life in 10 10 10
years
Tax rates 30% 30% 30%
Depreciation per 20% 20% 20%
year
Salvage Value 0 0 0
Results
Scenario Analysis Case:

Fertilizer industry in Pakistan is currently facing sheer competition.

Players in the fertilizer industry are offering huge discounts on
Urea. FFC is unable to manage discounts as it has higher variable
cost per unit of production. The reason behind the higher variable
cost is unavailability of cheap gas which is available to its
competitors. Inability of the company to offer the discounts has
resulted in reduced unit sales, Profit Margins and return. The
company is unable to manage the profit streams and is currently
facing huge losses.
Directors and Senior Managers of the company need a viable
solution to this problem.
Data
Results:

NPV Base Case PKR 19,844,511.30

NPV Worst Case -PKR 217,890,862.62
NPV Best Case PKR 440,680,701.75
Expected NPV PKR 56,464,674.61
 Break Even Analysis Case:

Shaheen private limited produces and sells Plastic chairs to wholesalers and
retailers. Company sell Rs 840 per chair. Variable cost to the company including
direct labour, direct material and Manufacturing overhead is Rs. 600 per chair.
Company has to bear the fixed cost of 2,500,000 per month. Currently, company is
able to sell only 20,000 chairs per month. The company has been in the business
from past ten years and has been earning handsome profits.

What next?
Data

Shaheen Private
Limited
Rs
Price of chair each 840
Variable cost per unit 600
Contribution Margin 240
Data
12 months sales forecast:
Results
Results