QUESTION 5 [10 MARKS] Vehicle market in Malaysia and south East Asia is very competitive. Most of the vehicle type which has higher sales volume is a sedan B, C and D segment as shown in the Table 3. Table 3: Model of sedan B, C and D segment nowadays Sedan 1500cc(B segment) Sedan 1.8 - 2000cc (C segment) Sedan 2.0 - 2400cc (D segment) Toyota Vios vs Nissan Almera vs Honda TOYOTA CAMRY VS HONDA ACCORD VS NSG Example: Toyots Vios, Nissan Example: Toyota Altis, Nissan Example: Toyota Camry, Almera, Honda City Sylphy, Honda Civic Nissan Teana. Honda Accord General price : RM70-90k General price : RM100-120k General price : RM130- 170k So to tap the market segment, P3 Group launch a new sedan model based on the mixed of specifications at price well below their current competitor (shown in the Table 4). Table 4: New sedan model introduced by P3 Group P3 John P3 Joni P3 Jonathan (B segment) (C segment) (D segment) Price: RM 50K Price: RM 80k Price: RM 105k Main Specification: DOHC, Main Specification: DOHC, Main Specification: DOHC. liquid cooled 1500cc (turbo), liquid cooled 1800cc (turbo), 2000 - 2400cc (turbo), 185HP 135HP (5000 rpm) 6 speed 165HP (5000 rpm) 6 speed (5000 rpm), 6 speed They targeted to increase the market sales in Malaysia by 19% market share in 4 years time by selling all three segments. All models are based from the Goliden Pte. Ltd (China) platform which was sold in higher volume compare to imported manufacturer. So P3 Group is required to pay a significant amount of investment to Goliden Pte. Ltd to acquire the vehicle platform. The marketing department convinces the P3 Group's board of director (BOD) about the projected sales (Malaysia and south East Asia) and expenditure based on following table (Table 5). However, BOD requires an anticipated analysis in 4 years' time before making any decision. One of their principal concern is the rate of return 15% which quite tricky during today's economic condition. Assist them by preparing each project's; financial model base on payback (payback period and Return on Investment (ROI)) (3 MARKS) Net Present Value (NPV) in 4 years' time calculation. (6 MARKS) Then, give your opinion about all projects regarding which project is the best one. Then arrange the project priority (1 MARKS) Note: n F. Project NPV = 10 + where (1 + k) 1. = Initial investment (since it is an outflow, the number will be negative) F, = net cash inflow for period t k = required rate of return Table 5: Projected sales and expenditure based on marketing research Unit Profit after Profit after Profit after Profit after Initial investment (RM) expenses expenses expenses expenses (cash flow) (cash flow) (cash flow) (cash flow) (RM) (RM) (RM) (RM) 200M 200M 200M 200M 250M 250M 250M 250M 290M 290M 290M 290M 600M 720M P3 John P3 Joni P3 Jonathan *M=million in RM 820M