Objective: To simulate the cash flows from the new car model, from the development time to the end of its life cycle, so that General Ford can estimate the NPV of after-tax cash flows from this car. General Ford (GF) Auto Corporation is developing a new model of compact car. This car is assumed to generate sales for the next five years. GF has gathered the following information about the car: Fixed cost of developing the car: This cost is assumed to be $700 million. The fixed cost is incurred at the beginning of year 1, before any sales are recorded Contribution margin per car: This is the unit selling price minus the variable cost of producing a car. GF assumes that in year 1, the margin will be $4,000. GF assumes that after year 1, the margin will decrease by 4%. Sales: The demand for the cars is an uncertain quantity. In its first year, GF assumes that number of cars sold will be triangularly distributed with minimum of 50K, most likely of 75K and maximum of 85K. Every year after that, the company assumes that the sales will decrease by a percentage which is also triangularly distributed with parameters being 5%, 8% and 10%. GF assumes that the percentage decreases in successive years are independent of each other. Depreciation and taxes: GF will depreciate its development cost on a straight-line basis over five years. The corporate tax rate is 40%. Discount rate: GF's cost of capital is 10%.