****Recommend that you source business journals, periodicals, and textual references as well as any online research. Make sure you support your ideas with facts and figures. Please try to use your own words and ideas based on research rather than copy and paste other's words from the internet. You should USE PROPER HARVARD style in-line citations, image source citations, and an alphabetical CITATION LIST in a references section.

AN INVESTMENT ANALYSIS CASE STUDY The Setting Apple Disrupts the Auto Market: The Apple iCar? Apple Inc. has had a very good run, both in terms of earnings and stock prices, over the last decade. Based largely on the success of the iPod, the iPhone and the iPad, the company has reported double digit growth in revenues and earnings over the last few years (see exhibit 1) and its stock price has reflected this success (see exhibit 2). It has a substantial cash balance and a strong balance sheet (see exhibit 3 for balance sheet information). However, Tim Cook, CEO of Apple, is concerned that the halcyon days of the iPhone are coming to an end and is under pressure from financial markets to come up a new product in a big market. The Proposal Apple is considering entering the automobile market with an innovatively designed electric car, called the iCar, aimed at the premium end of the automobile market. You have been asked to collect the data to make the assessment and have come back with the following information: 1. R&D Expenses: Apple has already spent (and expensed) $ 5 billion on research on the automotive technology and development of the commercial design. None of that money can be recouped at this stage, if Apple decides not to go ahead with the iCar. 2. Introductory Costs; If Apple decides to go ahead with the iCar investment, it will have to spend $22 billion up front (right now) to lock in suppliers, distributors and retailers and to invest in infrastructure. The cost is depreciable over the next 10 years, down to a salvage value of $ 2 billion, and Apple expects to use straight-line depreciation. 3. Market Potential and Share: In the premium auto market (including all cars priced at or above $60,000) there were 5 million automobiles sold globally in the most recent year and the market is expected to grow approximately 4% a year for the next decade. Apple expects to gain a 2% market share next year if the iCar is introduced and increase that