1 Take Five Systems, a new start-up, is developing a new iPhone application (app) and provides you with the following assumptions: a. Development and testing of the new app will take four months. Month five is the first month of revenue generation. b. Initial monthly app sales of 5,000 downloads at a price of $2.99 c. Unit sales will grow at 15% per month for months six through twelve and then will be flat thereafter d. The app will become obsolete and will need to be revised/replaced after month 18 Use the data provided to forecast Take Fives monthly revenue for Months 1-18 2 Take Five Systems is concerned about the accuracy of their revenue estimates in Question 2. Specifically, they wish to use sensitivity analysis to evaluate the impact on Month 18 revenue of the following: a. Variations in 2% increments between 9-21% in the growth rate of unit sales in Months 5-12 (that is, 9%, 11%,..., 19%, 21%) b. Variationin500unitincrementsbetween2,500and7,500inthelevelofinitial sales (that is, 2,500, 3,000,..., 7,000, 7,500) 3 Take Five Systems from Question 2 wishes to evaluate the impact on revenue of the following two scenarios: a. Development takes just two months, so revenue begins in Month 3. The earlier market entry allows Take Five to price the app at $3.99. Initial sales are 4,000 units, unit sales grow 17% through Month 12 (month 4 though 12) and are flat thereafter through month 18. b. Development takes seven months and competitors are already in the Apple store. Take Five is forced to price their app at $1.99 and initial sales (Month 8) are only 3,000 units. This number grows by 10%, but only for six months (Months 9-14), before flattening out for the last four months.