Quite a number of assumptions or model parameters determine the positive NPV of €2,012,000 in Exhibit 14-9. Among these parameters are the size of the market in year 0, the market growth rate, and ShadeTree’s market share.

a. Explain how these parameters affect expected revenues (change each separately and put others at the base levels from the text).

b. Compute year 1’s gross margin if the market size is €60 million or €40 million.

c. Compute year 1's gross margin if the market growth rate is 2 percent or 6 percent.

d. Compute year 1's gross margin if ShadeTree’s market share is 30 percent or 15 percent.

e. The most likely scenario uses the parameters in Exhibit 14-8. Compute year 1’s gross margin under bestcase and worst-case scenarios using the parameters in requirements (b)-(d).