Monza's sales 10,000 Monza's price $65,000 Monza Cost structure per car Body materials $11,000 Engine Drivetrain $4,000 $6,000 Given MACRS Schedule year 1 33% year 2 45% year 3 15% year 4 7% Battery Pack $20,000 Electronics $5,000 Labor (allocated) $4,000 Overhead (allocated) $2,000 Consulting Food $50,000 Spenes Price $80,000 Spenza Sales projections (number of cars) Year 1 Year 2 Year 3 Year 4 Year 5 Base Case Scenario Optimistic Scenario Pessimistic Scenario 5,000 7,000 6,000 4,000 3,000 5,500 7,500 6,500 4,500 3,500 4,500 6,500 5,500 3,500 2,500 Plant Investment $250 Mil Alternative Land Use $15 Mil Plant Capacity 10,000 cars Project life 4 years Percentage of Debt Financing 50% Interest Rate 7% Tax rate 21% NWC % of direct manufacturing < Monza Sales Cannibalization Historical Electricity Cost Carbon Body Cost per Car Darcants of alectricity. 4.75% 1,000 cars ######## 70% of national average $14,000 80% Solution Legend Value given in problem Formula/Calculation/Analysis required Assumptions, Qualitative analysis or Short answer required Goal Seek, Scenario or Data Table cell Crystal Ball Input Crystal Ball Output NWC as % of direct manufacturing < Monza Sales Cannibalization Historical Electricity Cost Carbon Body Cost per Car Percentage of electricity 4.75% 1,000 cars ######## 70% of national average $14,000 80% Electricity used per car 160,000 kwh Other Spenza direct costs Body materials $2,800 (other than electricity) Engine $4,000 Drivetrain $6,000 Battery Pack $15,000 Electronics $5,000 Straight-Line depreciation MACRS Depreciation Your recommendation Solution Choosing Depreciation Year 3 Year 4 $62.5 Mil $17.5 Mil Year 1 $62.5 Mil $82.5 Mil Year 2 $62.5 Mil $112.5 Mil $62.5 Mil $37.5 Mil Sales Volume (number of cars) Projected electricity cost (per kWh) Projected Net Income Year 2021 5,000 $77.0000 7,000 $28.0000 Year 2022 Year 2023 6,000 $42.0000 Year 2024 4,000 $77.0000 Year 2025 3,000 $28.0000 Sales Volume (number of cars) Projected electricity cost (per kWh) Revenues Projected Net Income Year 2021 5,000 $77.0000 Year 2022 7,000 $28.0000 Year 2023 6,000 $42.0000 Year 2024 4,000 $77.0000 Year 2025 3,000 $28.0000 $400.0 Mil $560.0 Mil $480.0 Mil $320.0 Mil $240.0 Mil Direct Costs Body materials(electricity only) $61,600.0 Mil $31,360.0 Mil $40,320.0 Mil $49,280.0 Mil $13,440.0 Mil Body materials $14.0 Mil (other than electricity) $19.6 Mil $16.8 Mil $11.2 Mil $8.4 Mil Engine $20.0 Mil $28.0 Mil $24.0 Mil $16.0 Mil $12.0 Mil Drivetrain $30.0 Mil $42.0 Mil $36.0 Mil $16.0 Mil $18.0 Mil Battery Pack Electronics Total Direct Costs Fixed Costs Labor $75.0 Mil $105.0 Mil $90.0 Mil $60.0 Mil $45.0 Mil $25.0 Mil $35.0 Mil $30.0 Mil $20.0 Mil $15.0 Mil $61,764.0 Mil $31,589.6 Mil $196.8 Mil $49,403.2 Mil $13,538,4 Mil Overheads $40.0 Mil $20.0 Mil Depreciation EBIT Interest EBT Taxes Net Income $82.5 Mil $40.0 Mil $20.0 Mil $112.5 Mil $40.0 Mil $40.0 Mil $40.0 Mil $20.0 Mil $20.0 Mil $37.5 Mil $17.5 Mil -$61,506.5 Mil $8.8 Mil -$61,515.3 Mil -$61,346.5 Mil -$61,426.5 Mil $8.8 Mil -$61,355.3 Mil $8.8 Mil -$61,435.3 Mil -$12,918.2 Mil -$12,884.6 Mil -$12,901.4 Mil -$48,597.0 Mil -$48,470.6 Mil -$48,533.8 Mil -$61,586.5 Mil $8.8 Mil -$61,595.3 Mil -$12,935.0 Mil -$48,660.2 Mil $20.0 Mil -$61,666.5 Mil $8.8 Mil -$61,675.3 Mil -$12,951.8 Mil -$48,723.4 Mil Projected FCF Monzas Lost Profit