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The analysis will also provide schedules that detail: <br />• Operating income and cash flow <br />• Net present value analysis <br />• Subscriber revenue by service <br />• Subscriber revenue by customer /customer class <br />• Debt service analysis <br />• Reserve fund requirements <br />• Uses and sources of funds <br />• Operating expenses <br />• Operational savings <br />• Depreciation summary <br />• Projected construction costs summary for network, hardware, buildings <br />and other equipment <br />• Return on investment (ROI) <br />Additional appendices for each service will further analyze the costs and <br />revenues associated with the project. <br />One of the most critical components of a financial analysis is to determine the <br />impact that varying assumptions will have on the project. We will perform a <br />sensitivity analysis of the factors used in the cost/benefit analysis. The <br />sensitivity and breakeven analysis will assist the city in assessing the downside <br />risks of the project. For example, if the analysis assumed a 35% market <br />penetration for Internet, what would occur if the penetration were reduced to <br />250/o? What happens if Internet pricing is reduced 100/o? 200/o? <br />Our recommendation <br />This portion of the analysis will quantify the breakeven point of the project; i.e., <br />at what point will this new venture recover the project's capital costs and <br />will be based upon <br />provide an adequate retain to Saint Anthony Village. In addition, this task will <br />use the Monte Carlo simulation as stated in our Statement of Qualifications <br />what is best for Saint <br />(sOQ ). <br />Anthony Village and <br />9. Provide a Schedule of Activities & Tasks <br />thee/ <br />We will discuss the preliminary steps that will be necessary to initiate the <br />citizens. <br />recommendations. <br />10. Develop Report and Recommendations <br />Our recommendations will include: <br />Your Most Valued Advisor • virchowkrause.com ii <br />• What is needed? <br />• What is doable? <br />• What is practical? <br />• What alliances would enhance community objectives? <br />• How public - private "partnerships" might asset the community. <br />VirchMrause <br />company <br />Your Most Valued Advisor • virchowkrause.com ii <br />