Task IV 20 points Nils sensed a strange feeling. Somehow the office was silent and even from John and Annie's office the normal chat and laughter could not be heard. He left his office to get himself another cup of tee when he met Elinore. She was not in a good mood and her wet clothes did not make that better. Her car, a Morgan 1975, had an engine failure a mile from the office and she had walked trough the rain to office as her mobile did not work. However she uttered her appreciation for the proposal she had received from Nils regarding the investment of surplus cash. Now she called upon John, Annie and Nils to come to the board room as she had an idea! John and Annie acted a little intimidated as they always were the two who delivered new ideas. This was going to be an exiting afternoon! It was time for Elinore to deliver her idea: It is time to do something else than asymmetrical pumps. We need to go into the heat pump market. I have made some research and we already have all technical and operational prerequisites. Further to my research the up-front investment is M25 ( million pounds) however this is not that straight forward. We need to consider this as a two year project to start with. The possibility is to get at M15 cashflow during the first year at a probability of 50%. If not my analyse shows a zero cash flow, CF. Now if we get the M15 in CF the probability for year two is 25% at 0 CF, 35% at M25 and 40% at M35. On the other hand if we get zero CF in year one then we have 10% probability to get -M5, 45% at M25 and 45% at M40! This is a fantastic opportunity we can not miss out on! According to my own calculations at a required rate of 10% this will be fantastic opportunity. We assume CF is received in the end of each year and that the investment is paid directly. Nils proposed a break as he liked to check the input data carefully. The outcome after having verified the numbers with suppliers and market data he found that the numbers were correct. After an hour they met again and Nils proposed to make a proper analyse of Elinore's proposal. However John and Annie were not happy at all! They concluded that it is not in the interest of the company to walk into an adventure that would not deliver a return on investment that is equal or higher than the 15% Elinore herself hade decided for and that looking at the outcomes the overall proposal is far too risky! Elinor was now very upset! "How can you come to that conclusion! Is this you normal guts and feel approach or do you have some elaborative analyse to back it up with?" Annie and John calmly replied - well we just felt this will never fly.... As Nils later on drove Elinor back to Luton she asked him for a full analyse of this. This had been a dreadful day for Elinore; First the breakdown of her beloved Morgan 1975 and then having to take such shameful comments from John and Annie. Help Nils with the analyse and propose an answer back to Elinor, John and Annie. Task IV 20 points Nils sensed a strange feeling. Somehow the office was silent and even from John and Annie's office the normal chat and laughter could not be heard. He left his office to get himself another cup of tee when he met Elinore. She was not in a good mood and her wet clothes did not make that better. Her car, a Morgan 1975, had an engine failure a mile from the office and she had walked trough the rain to office as her mobile did not work. However she uttered her appreciation for the proposal she had received from Nils regarding the investment of surplus cash. Now she called upon John, Annie and Nils to come to the board room as she had an idea! John and Annie acted a little intimidated as they always were the two who delivered new ideas. This was going to be an exiting afternoon! It was time for Elinore to deliver her idea: It is time to do something else than asymmetrical pumps. We need to go into the heat pump market. I have made some research and we already have all technical and operational prerequisites. Further to my research the up-front investment is M25 ( million pounds) however this is not that straight forward. We need to consider this as a two year project to start with. The possibility is to get at M15 cashflow during the first year at a probability of 50%. If not my analyse shows a zero cash flow, CF. Now if we get the M15 in CF the probability for year two is 25% at 0 CF, 35% at M25 and 40% at M35. On the other hand if we get zero CF in year one then we have 10% probability to get -M5, 45% at M25 and 45% at M40! This is a fantastic opportunity we can not miss out on! According to my own calculations at a required rate of 10% this will be fantastic opportunity. We assume CF is received in the end of each year and that the investment is paid directly. Nils proposed a break as he liked to check the input data carefully. The outcome after having verified the numbers with suppliers and market data he found that the numbers were correct. After an hour they met again and Nils proposed to make a proper analyse of Elinore's proposal. However John and Annie were not happy at all! They concluded that it is not in the interest of the company to walk into an adventure that would not deliver a return on investment that is equal or higher than the 15% Elinore herself hade decided for and that looking at the outcomes the overall proposal is far too risky! Elinor was now very upset! "How can you come to that conclusion! Is this you normal guts and feel approach or do you have some elaborative analyse to back it up with?" Annie and John calmly replied - well we just felt this will never fly.... As Nils later on drove Elinor back to Luton she asked him for a full analyse of this. This had been a dreadful day for Elinore; First the breakdown of her beloved Morgan 1975 and then having to take such shameful comments from John and Annie. Help Nils with the analyse and propose an answer back to Elinor, John and Annie