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Use the following cash flows (in K billions) for the questions that follow: + use a 10% discount rate Year o Year 1-10 Investment -15
Use the following cash flows (in K billions) for the questions that follow: + use a 10% discount rate Year o Year 1-10 Investment -15 Sales 37.5 Variable Costs 30 Fixed Costs 3 Depreciation 1.5 Pretax profit 3 Tax@50% 1.5 Profit after tax 1.5 Operating cash flow 3 Net Cash Flow -15 3 a. What is the NPV of the electric scooter project under the following scenario? Market size 1.1 million Market share 0.1 Unit price K400,000 Unit variable cost K360,000 Fixed cost K2 billion b. Given that the manufacturing and marketing departments have come up with the market estimates below: Pessimistic Expected Optimistic Market size 0.8 million 1.0 million 1.2 million Market share 0.04 0.1 0.16 Unit price K300,000 K375,000 K400,000 Unit variable K275,000 K350,000 K300,000 cost Fixed cost K5 billion K3 billion K1 billion I. II. Conduct a scenario analysis Construct a tornado diagram to depict your results Interpret your results
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