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Assignment-2: Prakash Steel 1) Sensitivity Analysis: Name: Divyansh Singh Roll Number: 18-MF-27

The document contains a sensitivity analysis and income statement for a proposed steel project called Prakash Steel. The sensitivity analysis shows that with a 10% decrease in selling price, the NPV becomes negative (-1.78) and IRR drops to 2.99%, indicating the project is no longer viable. The 10-year income statement with a 10% decrease in selling price shows declining profits in the initial years turning positive from year 3 onwards, with cumulative positive cash flows.

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42 views

Assignment-2: Prakash Steel 1) Sensitivity Analysis: Name: Divyansh Singh Roll Number: 18-MF-27

The document contains a sensitivity analysis and income statement for a proposed steel project called Prakash Steel. The sensitivity analysis shows that with a 10% decrease in selling price, the NPV becomes negative (-1.78) and IRR drops to 2.99%, indicating the project is no longer viable. The 10-year income statement with a 10% decrease in selling price shows declining profits in the initial years turning positive from year 3 onwards, with cumulative positive cash flows.

Uploaded by

Divyansh Singh
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Name: Divyansh Singh

Roll Number: 18-MF-27


Assignment-2: Prakash Steel

1) Sensitivity Analysis
Particulars NPV(Price) IRR (%)
Base Case 3.16 25.92%
SP down 10% -1.78 2.99%
RM cost up 10% -0.19 11.10%
Project Cost up 10% 2.96 24.40%
S&D up 30% 2.36 22.54%

2) Predicted Income Statement for SP down by 10%


Particulars (₹ cr.) 1 2 3 4 5 6 7 8 9 10
Sales 10.80 14.40 18.00 18.00 18.00 18.00 18.00 18.00 18.00 18.00
Expenses
RM Cost 7.39 9.86 12.32 12.32 12.32 12.32 12.32 12.32 12.32 12.32
Utilities 0.84 1.12 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40
Employee Expenses 1.00 1.25 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50
S&D 0.54 0.72 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90
Administration 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Depreciation 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29
Interest on NWC @11% 0.17 0.23 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28
Total Cost 11.23 14.46 17.69 17.69 17.69 17.69 17.69 17.69 17.69 17.69

PBT -0.43 -0.06 0.31 0.31 0.31 0.31 0.31 0.31 0.31 0.31
(-) Tax @35% -0.15 -0.02 0.11 0.11 0.11 0.11 0.11 0.11 0.11 0.11
PAT -0.28 -0.04 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20
Operating cash inflow 0.01 0.25 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49

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