Otobai is considering still another production method for its electric scooter. It would require an investment of $15.30 billion in addition to the initial investment of $15.50. In addition tio the initial investment of 15.50 billion but would reduce variable costs by $50,000 per unit. The cost of capital was assumed to be 14%. The total investment can be depreciated on a straight-line basis over the 10-year period, and profits are taxed at a rate of 50%.

Consider the following estimates for the scooter project

Market size 1.10 million

Market share 0.1

Unit price $425,000.0

Unit variable cost $350,000.0

Fixed cost $3.10 billion

Assume investment is depreciated over 10 years straight-line and income is taxed at a rate of 50%.

a.) What is the NPV of this alternative scheme?

b.) Calculate the break-even point.

c.) Consider the following Preliminary cash-flow forecasts for Otobai's electric scooter project (figures are in $billions). Calculate the variable cost per unit at which the electric scooter project would break even. Assume that the initial investment is $15.50 billion. Investment is depreciated over 10years straight-line and income is taxed at a rate of 50%.

Year 0 Years 1-10

1. Investment $15.50

2. Revenue 46.75

3. Variable Cost 35.00

4. Fixed Cost 3.10

5. Depreciation 1.55

6. Pretax Profit 7.10

7.Tax 3.55

8. Net Profit 3.55

9. Operating Cash Flow 3

10. Net Cash Flow -15 3

e.) Calculate the DOL. Consider fixed cost assuming the additional investment of $15.50 billion.