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% The firms management introduced a bonus incentive scheme for NPV that is greater than the bonus limit of 50,000. Therefore, the known inputs in the model are: The Discount Rate of 12% and the Bonus limit of 50,000. 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. 2. Perform a single simulation of 10,000 iterations for the NPV and Bonus models and determine the probability of getting a negative (zero) NPV and the probability of no (zero) bonus. 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. b) Regression Coefficient. c) Correlation Coefficient. d) Contribution to Variance. 2 Write a Report to your COO to communicate the findings from your analyses. The report should describe the purpose and result of your analyses.