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In addition to providing cost/benefit analysis for individual service offerings, the model will include an <br />overall analysis for viable potential services detailed in this proposal and identified in the market potential <br />assessment. <br />The financial analysis will leverage the results of the market research and provide: <br />- Sensitivities of Ivey assumptions including, but not limited to: <br />I - Market penetration <br />-I. pricing <br />+ Ticred revenue suuctmes <br />+ Operating fees <br />+ System construction <br />+ Staffing levels <br />- Base, best, and worst case analysis. <br />The cost/benefit analysis will follow accounting standards and will not rely on cross -subsidization or off <br />balance sheet debt to skew results. <br />The analysis will also provide schedules that detail <br />n Operating income and cash flow <br />• Not present value analysis <br />o Subscriber revenue by service <br />• Subscriberrevenue bycustomm/customer class <br />o Debt service analysis <br />n Reserve find requirements <br />m Uses and sources of finds <br />® Operating expenses <br />® Operational savings <br />® Depreciation summary <br />® Projected construction costs summary for network, hardware, buildings and other equipment <br />s Return on investment (ROI) <br />Additional appendices for each service will further analyze the costs and revenues associated with the <br />project. <br />One of the most critical components of a financial analysis is to determine the impact that varying <br />assumptions will have on the project. We will perform a sensitivity analysis of the factors used in the <br />cosUbenefit analysis. The sensitivity and breakeven analysis will assist Saint Anthony Village in assessing <br />the downside risks of the project. For example, if the analysis assumed a 35% market penetration for <br />htternet, what would occur if the penetration were reduced to 25%? What happens if Internet pricing is <br />reduced 10%? 20%? <br />