Exercise $1$

Assume that as the treasurer of the Otobai Company in Osaka, Japan, you are considering the introduction of an electrically powered motor scootef for city use. What is the NPV of the electric scooter project under the following scenario?

$\backslash$table$[[$Market Size $($million$),1\mathrm{.}1],[$Market Share,$0\mathrm{.}1],[$Unit Price $($yen$),400,000],[$Unit variable cost $($yen$),360,000],[$Fixed Cost $($billion yen$),2]]$

Assumptions:

Investment: $15$ billion yen

investment amortized linearly over $10$ years

income is taxed at a rate of $50\%$

opportunity cost of capital $($discount rate$)$ is $10\%$