Linh script

Based on Pro forma statement, we will analyze whether this project is feasible or not. Firstly, we
calculate the OCF for each year, next is the change in NWC and capital spending, then we can
find the total project CF for each year.

So based on the total project CF, we calculate the net present value of this project is
613,025,700.87 VND, higher than 0, and Internal rate of return is 61% (is greater than the
required rate of return of 20%). Thus, we should accept this project.

Besides, we want to find out the effect of a company’s sales and fixed cost on its profit. The
analysis will isolate each of these sales and fixed costs and record the possible outcomes. We
assume that sales will be 1% higher/lower than baseline values and other inputs remain
unchanged. With the higher case, the CF will be as follows. The numbers highlighted in blue are
the numbers that have been changed. In this case, NPV is 641,787,594.97, increase by 4.69%
compare to the base NPV. With the lower case, the NPV decrease by the same number of the
higher case, by 4.69%.

About the fixed costs, we assume that fixed cost will be 1% higher/lower than baseline values.
Provided other inputs remain constant, the cash flows will be as follows. With higher case, the
NPV is 595,360,154.96, decrease by 2.88% compare to the base NPV and vice versa with the
lower case.
Based on the above analysis, it can be seen that the NPV of a project are most vulnerable to the
change in the sales price and less vulnerable to the change in fixed costs.

As a result, we should estimate sales prices as accurately as possible because they have the
greatest impact on the net present value of a project.