QUESTION 1

You have been approached by the management, who disagree on the figures that were originally used in the analysis. They want you to consider the following scenarios proposed by different directors in the company.

Take 5 years of this investment, the initial cost of investment R 15 billion for each project, tax rate is 50% and Discount rate is 10%

You have been approached by the management, who disagree on the figures that were originally used in the analysis. They want you to consider the following scenarios proposed by different directors in the company. Pessimistic 0.8 million Market share (%) Unit price (R) Variable cost (%) Fixed cost (R) Expected 1 million 10 375,000 80 3 billion Optimistic 1.2 million 16 400,000 70 1 billion 300,000 116 Carry out a sensitivity analysis of the project. What are the main uncertainties in the project