An Auto Corporation is developing a new model of compact car. This car is assumed to generate sales for the next 5 years. The firm has gathered information about the following quantities through focus groups with the marketing and engineering departments:

Fixed cost of developing car. This cost is assumed to be $1.4 billion. The fixed cost is incurred at the beginning of year 1, before any sales are recorded.

Margin per car. This is the unit selling price minus the variable cost of producing a car. GF assumes that in year 1, the margin will be S5000. Every other year, GF assumes the margin will decrease by 4%.

Sales. The demand for the car is the uncertain quantity. It assumes salesnumber of cars soldin the first year are triangularly distributed with parameters 100,000, 150,000, and 170,000. Every year after that, the company assumes that sales will decrease by some percentage, where this percentage is triangularly distributed with parameters 5%, 8%, and 10%. GF also assumes that the percentage decreases in successive years are independent of one another.

Depreciation and taxes. The company depreciates its development cost on a straight-line basis over the lifetime of the car. The corporate tax rate is 40%.

Discount rate. They figure cost of capital at 15%.

The company wants to develop a simulation model to evaluate the NPV of after-tax cash flows for this new car over the 5-year time horizon.