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Finished building the Buy the Business model. It should lead to an estimated net present value of the business as $10,942,168. Before you go into

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Finished building the Buy the Business model. It should lead to an estimated net present value of the business as $10,942,168. Before you go into negotiations, your co-investors have asked you to do some analyses to help them understand a few issues. a. The 10% discount rate is a strong assumption. Provide slides that help us visualize and understand how sensitive the forecasted NPV is with regards to this assumption. b. Selling 120,000 units in Yl with a 7.5% growth rate in quantity and 5% growth rate in price is uncertain. We are primarily concerned about the risk of a negative NPV. Provide slides that help us visualize and understand this risk under the following distributional assumptions (can assume each variable is independent): Input Parameter Distributional Assumption Y1 Sales Normal with mean 120,000 and standard deviation 20,000. Sales Growth Rate Beta distribution with alpha = 15, beta = 185 (so its mean is 7.5%) Price Growth Rate Beta distribution with alpha = 10, beta = 190 (so its mean is 5%) Finished building the Buy the Business model. It should lead to an estimated net present value of the business as $10,942,168. Before you go into negotiations, your co-investors have asked you to do some analyses to help them understand a few issues. a. The 10% discount rate is a strong assumption. Provide slides that help us visualize and understand how sensitive the forecasted NPV is with regards to this assumption. b. Selling 120,000 units in Yl with a 7.5% growth rate in quantity and 5% growth rate in price is uncertain. We are primarily concerned about the risk of a negative NPV. Provide slides that help us visualize and understand this risk under the following distributional assumptions (can assume each variable is independent): Input Parameter Distributional Assumption Y1 Sales Normal with mean 120,000 and standard deviation 20,000. Sales Growth Rate Beta distribution with alpha = 15, beta = 185 (so its mean is 7.5%) Price Growth Rate Beta distribution with alpha = 10, beta = 190 (so its mean is 5%)

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