I need your help to make a quantitative and qualitative assessment of the risk associated with the Persistence hiking shoe project.

According to the case Sneaker 2013 and the information related to that which is mentioned hereunder could you please help me to answer the following questions?

analysis shows the sneaker 2013 project to have a projected Net Present Value of over 130 million dollars and an Internal Rate of Return of over 28% with the required minimum cost of capital for this specific project being at 11%. However, some risks lie with choosing this project. For example, there could be a worldwide pandemic causing our projections in 2016 to prove false. There are also some worries about our endorsee being so young and not fully mature yet. Nevertheless, the numbers show this project to be the more advantageous of the two.

In comparison to the Sneaker 2013 project, the "Persistence Project" is far less favorable. The Persistence project has a Net Present Value of (6.5) million dollars, and an Internal Rate of Return of 8.5% with the minimum required cost of capital being 14%. However, there are some considerations to be made for this project. After further consultations with our Design Tech. team, we have discovered that an additional ten million dollars (bringing our total investment into design up to 60 million) could allow our hiking shoe's technology to remain relevant for five years rather than three. In doing so the outcome is a positive Net Present Value of almost 20million dollars, with an Internal Rate of Return close to 23% and the minimum required cost of capital still remaining at 14%.

QUESTIONS

2. Conduct a sensitivity analysis of the persistence project. Specifically, determine the NPV and the percentage change in NPV from the base case by varying each of the following inputs by +/- 10%: WACC, ratio of variable cost to revenue, after-tax salvage value, and global market growth (vary 2014 growth by +/-10% and assume the same revised growth rate for 2015). What does this analysis suggest about each of these four inputs?

3. Michelle believes that the original case inputs constitute the most likely scenario. However, she is concerned that New Balance's share of the global market could vary considerably from the base values (15% in 2013, 18% in 2014, 20% in 2015). Her marketing team has compiled two alternative scenarios. The first assumes that New Balance captures a substantially larger share of the global market. Specifically, in this scenario, Michelle assumes that New Balance's share of the market is 15%, 22%, and 30% in 2013, 2014, and 2015. The other scenario assumes that New Balance's attempt to enter this segment of the athletic shoe market is a failure, with market shares of 10%, 8%, and 5% in 2013, 2014, and 2015. Michelle feels that there is a 25% change that New Balance's share of the global market will be larger than expected, and a 25% chance that it will be smaller than expected. Determine the NPV for each scenario and the overall expected NPV, standard deviation of NPV, and coefficient of variation.

4. In addition to the sensitivity and scenario analysis, Michelle would also like to conduct a simulation analysis of the persistence project where she intends on using probability distributions to define four of the inputs, and determine the expected npv. Specifically, Michelle intends on defining the following inputs with distributions detailed below: Input Distribution Distribution Parameter Values WACC Uniform Minimum = 12% Maximum = 16% Variable Cost as % of Sales Revenue Normal Mean = 38% Standard Deviation = 6% Global Market Growth Triangular Minimum = 10% Likeliest = 15% Maximum = 20% New Balance Market Share Lognormal Location = 0% Mean = 15% Standard Deviation = 4%

For Global Market Growth, first set 2015 growth equal to 2014 growth using a simple excel equation for 2015 global market growth. Then, using Crystal Ball, define your distribution assumption on 2014 growth. For New Balance's Share of the Global Market, first use equations in excel to set 2014 market share to equal 2013 market share plus 3%, and a second equation to set 2015 market share equal to 2014 market share plus 2%. Then, using Crystal Ball, define your distribution assumption on New Balance's 2013 Market Share. In Crystal Ball, define your forecast as the cell containing your equation that computes NPV. Set the number of trials at 10,000. Your output should show the NPV histogram. Additionally, include the simulation statistics and percentiles (include by checking each under the dropdown for "View" in the NPV histogram). a. What is the expected NPV of the persistence hiking shoe project? b. What are the odds that the NPV will be positive? Oracle Crystal Ball is a Monte Carlo add-in for Microsoft Excel. Unfortunately, it will only work on PC's, and not on Mac's. To access the Free Trial of Oracle Crystal Ball, click on the following URL: https://www.oracle.com/applications/crystalball/classroom-edition/ Scroll to the bottom of the page, and click on Oracle Crystal Ball Free Trial found just under the header "Tools for Evaluating".