Financial Modelling Sensitivity and Scenario Analysis

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Sensitivity and Scenario Analysis

Question: Put in a scenario analysis manager to find what happens to the NPV of equity distributions when the below r to 55 and 40 respectively. Assume no tax and all profits are distributed to equity holders. i.e. no debt Start Date End Date Revenue (real p.a.) Costs (real p.a.) Inflation Cost of Capital Answer: 31-Dec-12 31-Dec-22 50 30 3.00% 15%

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ty distributions when the below revenues and costs are changed ers. i.e. no debt

Financial Modelling Sensitivity and Scenario Analysis

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www.videofinancialmodelling.com Sensitivity and Scenario Analysis Question: Put in a scenario analysis manager to find what happens to the NPV of equity distributions when the below revenues and costs are changed to 55 and 40 respectively. Assume no tax and all profits are distributed to equity holders. i.e. no debt Scenario Selector Scenario Description Start Date End Date Revenue (real p.a) Costs (real p.a) Inflation Cost of Capital Answer: Year End Inflation Index Revenue Costs Distributions to Equity NPV of Equity Distributions 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15 31-Dec-16 31-Dec-17 100.00% 103.00% 106.09% 109.27% 112.55% 115.93% 50 52 53 55 56 58 (30) (31) (32) (33) (34) (35) 20 21 21 22 23 23 135 31-Dec-18 31-Dec-19 119.41% 122.99% 60 61 (36) (37) 24 25 31-Dec-20 31-Dec-21 31-Dec-22 126.68% 130.48% 134.39% 63 65 67 (38) (39) (40) 25 26 27 1 1 2 3 Rev = 55, Costs =40 Inf=2.5% 4 5

31-Dec-12 31-Dec-22 50 30 3.00% 15.00%

50 30 3.00%

55 40 2.50%