The Problem: Blue Corn Manufacturing Ltd is in the business of automobile and other ancillary services. The company wants to start its subsidiary business in China as an expansion plan for assembling the auto part. The companys Chief Operating Officer (COO) after taking into consideration the firms portfolio of investments has derived a Weighted Average Cost of Capital (WACC) of 12% as the appropriate discount rate for calculating the firms Net Present Value (NPV). Given the uncertainties surrounding Brexit and the current COVID-19 pandemic, the firms COO has asked you, the risk analyst to model the following uncertain inputs, using appropriate probability distribution functions. Following a detailed analysis of the firms historical data, you have decided to use the following distributions and parameters to model the uncertain inputs: Table 1: Uncertain Inputs and Parameters of Distributions Uncertain Inputs Distribution Parameter 1 Parameter 2 Parameter 3 Investment Cost Triangular 90,000 100,000 150,000 Year 1 Revenue Triangular 80,000 100,000 110,000 Annual Fixed Cost Triangular 32,000 35,000 38,000 Annual Revenue Growth Rate Normal 5% 8% Annual Variable Cost Percentage Normal 50% 2% Use the following Sampling Settings: Sampling Type: Latin Hypercube. Random Number Generator: Mersenne Twister. Initial Seed: Fixed at 12345. For the purpose of this coursework, you are required to do the following: 1. Calculate the Discounted Cash Flows (DCF) for 10-years and derive the Net Present Value using the uncertain input variables. (5 Marks) 2. Perform a single simulation of 10,000 iterations for the NPV model and determine the probability of getting a negative (zero) NPV at 95% Confidence Interval (2 Marks) 3. Perform sensitivity analysis for the NPV output to determine the variable with the largest impact on NPV (Biggest Driver of NPV) using the following: a) Change in Output. (2 Marks) b) Regression Coefficient. (2 Marks) c) Correlation Coefficient. (2 Marks) 2 d) Contribution to Variance. (2 Marks) Total (15 Marks) Write a Report to your COO to communicate the findings from your analyses. The report should describe the purpose and result of your analyses. A well written report will demonstrate your ability to: a) Literature Review: Gather, evaluate and analyse relevant information. Relevant concepts explored, clear and progressive discussion and critical evaluation evidenced. (25-Marks). b) Findings and Discussion: Make correct conclusions that are supported by the evidence and analyses of the report. Professional and clear presentation of findings. Progressive discussion grounded in appropriate theory. (25-Marks) c) Recommendations: Cyclical closure evidenced. Discussions are adequate in scope, well underpinned by the project analyses and reflect an understanding of the report's essence. Strengths & limitations assessedrecommendations made with due consideration of the context. (20-Marks). d) Presentation: Structure material in a coherent and logical manner supported with relevant diagrams. (10-Marks). e) Referencing: Follows the Harvard Style. Sources properly referenced and acknowledged within the text. (5-Marks)