D G M N 0 a R 5 Sup Plant Co considers a 20-year supr beet processing factory project costing -800 MEUR with a present value of expected Free Cash Flows equal to +825 MEUR Sup Plantz could increase production flexibility by additional investment of 175 MEUR immediately adapting the planned facilities for a Pop&Flex I automation system. The Pop&Flex I can increase the value of the production anytime during the system's recommended time of 6 years by +18% for a one-time cost of .100 MEUR. or cut production by 10% for a one-off saving of +80 MEUR A further benefit of the Pop&Flex system is that it can be upgraded anytime during the Popa Flex is iespan of 6 years for a one-off cost of 1000 MEUR, to the Pop&Flex Il system which can boost the value of the production by 120% The planned sugar beet production facilities will not allow further production flexibility to be extracted from either Pop&Flex systems after the Pop&Flex Il prade. Both Pop&Flex systems have a zero salvage value at the end of their life cycle The volatility of the tupar beet industry's 30% pa The competicion affects the project value negatively with 4% PA The riskfree rate la 2% pa and the cost of capital 8% pa For each question a-e.pvel) the total NPV value of the project with the flexibility taken into account, and i) the value of the flexibility (real options) alone a The supar beet project could be launched now or later. Consider the option to deler. What is the total NPV of the project today started at optimal time, up until 6 years' time. without considering further extensions into Pop&Flex I or IP ) What is the value of the option to deter! b.) What is the NPV of the supar beet production project with Pop&Flexi automation installed and operated optimally? What is the value of flexibility! cWhat is the NPV of the whole project in b. Walso the Pop&Flex Il upgrade is undertaken at optimal time! ) What is the total value of flexibility! d. What is the NPV of the whole project with maximum flexibility optimally managed (b-c.) volatility would instead be 358? What is the overall value of flexibility! eWhat is the NPV of the whole project with optimally managed flexibility (b-c) it the life-span of the Pop&Flex systems could be extended to 7 years (with volatility assumption from d.)?:) What is the overall value of flexbility under this scenario! D G M N 0 a R 5 Sup Plant Co considers a 20-year supr beet processing factory project costing -800 MEUR with a present value of expected Free Cash Flows equal to +825 MEUR Sup Plantz could increase production flexibility by additional investment of 175 MEUR immediately adapting the planned facilities for a Pop&Flex I automation system. The Pop&Flex I can increase the value of the production anytime during the system's recommended time of 6 years by +18% for a one-time cost of .100 MEUR. or cut production by 10% for a one-off saving of +80 MEUR A further benefit of the Pop&Flex system is that it can be upgraded anytime during the Popa Flex is iespan of 6 years for a one-off cost of 1000 MEUR, to the Pop&Flex Il system which can boost the value of the production by 120% The planned sugar beet production facilities will not allow further production flexibility to be extracted from either Pop&Flex systems after the Pop&Flex Il prade. Both Pop&Flex systems have a zero salvage value at the end of their life cycle The volatility of the tupar beet industry's 30% pa The competicion affects the project value negatively with 4% PA The riskfree rate la 2% pa and the cost of capital 8% pa For each question a-e.pvel) the total NPV value of the project with the flexibility taken into account, and i) the value of the flexibility (real options) alone a The supar beet project could be launched now or later. Consider the option to deler. What is the total NPV of the project today started at optimal time, up until 6 years' time. without considering further extensions into Pop&Flex I or IP ) What is the value of the option to deter! b.) What is the NPV of the supar beet production project with Pop&Flexi automation installed and operated optimally? What is the value of flexibility! cWhat is the NPV of the whole project in b. Walso the Pop&Flex Il upgrade is undertaken at optimal time! ) What is the total value of flexibility! d. What is the NPV of the whole project with maximum flexibility optimally managed (b-c.) volatility would instead be 358? What is the overall value of flexibility! eWhat is the NPV of the whole project with optimally managed flexibility (b-c) it the life-span of the Pop&Flex systems could be extended to 7 years (with volatility assumption from d.)?:) What is the overall value of flexbility under this scenario
