Questions $8-10$ will cover the Electric Vehicles scenario.

You are working at an electric vehicle manufacturer$/$retailer and are in change of determining if you should spend the next $3$ years $($Year $0,1,$ and $2)$ focusing on making $($and selling$)$ electric cars or electric buses. Cars are sold to end consumers, buses are sold to municipal transit system. In the ElectricVehicles tab in your Excel file, you will find the fixed cost associated with manufacturing each product type, as well as the per$-$unit cost for each unit you manufacture. You also have the per$-$unit revenue, your annual capacity $($the most you can make$),$ and the expected annual demand for each product. Assume a discount rate of $12\%.$ Additionally, assume that each year after Year $0,$ you expect to be able earn $5\%$ more revenue for each unit you sell, compared to the previous year.

Each year, there is a $70\%$ chance that demand will increase by $20\%,$ and a $30\%$ chance that demand will decrease by $10\%.$

What is your expected net present value across Years $0-2$ for producing electric cars? Report your answer in terms of dollars $($$$),$ rounded to the nearest dollar.

Be sure to show your work in the Question $8$ Excel tab.

Cars Buses

Annual fixed cost $$1,000,000$ $$1,100,000$

Per$-$unit cost $$6,000$ $$9,000$

Annual capacity $13,0008,000$

Annual demand $10,0005,000$

Per$-$unit revenue $$33,000$ $$70,000$

Discount rate $0\mathrm{.}12$

Annual per unit revenue increase $0\mathrm{.}05$