For this project, please use Excel to do your calculations and analysis and then type a report in MS Word. Your report should clearly and thoroughly answer the below six questions. The report should be typed double-spaced using a Times New Roman Font, size 12. Please limit your report to no more than 10 pages. Submit your report and Excel file on Blackboard. All of this needs to be completed by the listed due date on the syllabus. Also, you must use the Scenario Manager Function as well as the simulation from Excel for this project.

1) Use the base case assumptions (pg. 4) as well as the information presented in the case to build a four-year discounted cash flow model for Advanced Seal given a 50% Cannibalization rate for the Premium Product and a 15% Cannibalization rate for the Basic Product. What are your NPV and IRR results? Please use the Basic Template from the Excel file provided for the project. (10 pts)

2) Calculate (1) again using a 55% Cannibalization for the Premium Product and a 15% Cannibalization rate for the Basic Product. Show your NPV and IRR results. Also, calculate (1) again using a 60% Cannibalization rate for the Premium Product and a 15% Cannibalization rate for the Basic Product. Show your NPV and IRR results. (10 pts)

3) Use the model developed in (1) to test the implications of Christina Whitmans Proposal to Drive Revenue" (pg. 5). Please use a 50% Cannibalization rate for the Premium Product and a 15% Cannibalization rate for the Basic Product. Show your NPV and IRR results. Now, repeat this step but use a 57.5% Cannibalization rate for the Premium Product and a 15% Cannibalization rate for the Basic Product. Show your NPV and IRR results. a 65% Cannibalization rate for the Premium Product and a 15% Cannibalization rate for the Basic Product. Show your NPV and IRR results (15 pts)

4) Use the model developed in (1) to test the implications of Margaret Tans Proposal to Minimize Cannibalization (i.e. raising the price to $23 dollar and minimize the Cannibalization rate to 45% - pg. 6) Show your NPV and IRR results. (5 pts)

5) Going back to the base case (Questions (1) & (2)), assuming for base case there is a 30% probability for a 50% Cannibalization rate for the Premium Product, a 40% probability for a 55% Cannibalization rate for the Premium Product, and a 30% probability for a 60% Cannibalization rate for the Premium Product - calculate Expected NPV, Standard Deviation of NPV, and Coefficient of Variation of NPV. Assuming P&G generally accepts projects with a Coefficient of Variation range between 0.3 to 0.5, should P&G accept the Premium Product? Going back to Christina Whitmans Proposal to Drive Revenue" (Question (3), assuming for Proposal to Drive Revenue" there is a 40% probability for a 50% Cannibalization rate for the Premium Product, a 35% probability for a 57.5% Cannibalization rate for the Premium Product, and a 25% probability for a 65% Cannibalization rate for the Premium Product - calculate Expected NPV, Standard Deviation of NPV, and Coefficient of Variation of NPV. Assuming P& generally accepts projects with a Coefficient of Variation range between 0.3 to 0.5, should P&G accept the New Product now? (10 pts)

Subject is Finance

(6) Monte Carlo Simulation Analysis - Conduct a 1,000 trial Monte Carlo simulation using the base case (Question (1)) and the following assumption: Normal distribution for Cannibalization rate of the Premium Product : o Mean = 50%, Standard deviation = 5% Normal distribution for Per unit revenue of the New Product o Mean = $23, Standard deviation = $2 Report the following statistics from your trial: Mean, Standard deviation, Median, Probability of NPV > 0, Coefficient of Variation. Also, provide a Histogram of your simulated NPV. Assuming P&G generally accepts projects with a Coefficient of Variation range between 0.3 to 0.5, should P&G accept the New Product now given your simulation results ? (10 pts)

Hint: Cannibalization of 50% => - 50% * 2,000,000 = -1,000,000 (i.e. reduce 1 million of Premium Product); same principle applies for the Basic Product. You can set Net Working Capital Turnover to run at a rate of 9 (average is 8 to 10 times). Footnote 4: Net Working Capital = Incremental Revenue/ Net Working Capital Turnover. The Depreciation expense is based on the Depreciation Schedule in Footnote 3. The Terminal Value for the Capital expenditure is calculated as the tax shield of the remaining book value times the tax rate.