2) CapEx = $40,000,000 + $20*K_B + $30*K_C + $80*K_T for a capacity portfolio with Barracuda annual capacity K_B, Cheetah annual capacity K_C and test annual capacity K_T.

For simplicity, assume zero discount rate in calculating NPV. Given the short product life cycle, Seagate has to make its capacity decisions for a single time period of one year, at the end of which the manufacturing capacity will have zero salvage value. Due to the long lead time in building new capacity, the capacity investment decision must be made before the selling season starts, i.e., before Seagate observes the actual demand. However, the production and allocation decisions can be made contingent on (i.e., after observing) the actual demand, but they are subject to the constraint of the invested capacity. To calculate profit, use the contribution margins provided in the case, i.e., $400 per unit for Cheetah and $300 per unit for Barracuda.

What is the expected net present value E(NPV) of the capacity proposal (300, 300, 600)? *

What is the expected net present value E(NPV) of the capacity proposal to invest in 300 Barracuda final assembly capacity, 300 Cheetah final assembly capacity, and 600 shared Test capacity? [all capacity numbers are in thousands]. Provide E(NPV) in millions with 2 digits after decimal point. So if your calculation shows that E(NPV) is $81,934,560, please insert 81.93 as your answer.

What is the expected net present value E(NPV) of capacity plan (350, 450, 700)? *

What is the expected net present value E(NPV) if we were to invest in 350 Barracuda final assembly capacity, 450 Cheetah final assembly capacity, and 700 shared Test capacity? [all capacity numbers are in thousands]. Provide E(NPV) in millions with 2 digits after decimal point. So if your calculation shows that E(NPV) is $81,934,560, please insert 81.93 as your answer.

Explain the pros and cons of the larger capacity plan (350, 450, 700) versus (300, 300, 600) *

Enter the capacity portfolio, i.e the size of each asset you recommend Seagate invests in, starting with Cheetah. (for an annual capacity of 300,000 units per year, enter 300. So the current proposal is 300 Cheetah assembly capacity, 300 Barracuda assembly capacity, and 600 test capacity). You may recommend one of the portfolios proposed in the questions above, or any other capacity portfolio you prefer.

Recommended Cheetah Capacity = *

Recommended Barracuda Capacity = *

Recommended Test Capacity = *

E(NPV) of your recommended capacity strategy = *

Assume no discounting. Provide the answer in millions with 2 digits after decimal point. So if your calculation shows that the expected net present value is $72,104,560, please insert 72.10 as your answer.