What changes would you make to the forecast in Exhibit 8? Justify and explain. If you do not think changes need to be made, justify and explain why you agree with the assumptions.

Exhibit 8 provides a base-case financial forecast for Ferrari based on Marchionne's volume-expansion forecast. The cost of capital had been estimated to be 5.0% in euro based on market data for comparable companies. This figure was consistent with the relatively low risk that analysts associated with Ferrari's expected cash flows. Although Ferrari was incorporated in the Netherlands, because the company headquarters and operations were in Italy, Ferrari profits would be taxed in Italy at a tax rate of 38%. Exhibit 1 Ferrari: The 2015 Initial Public Offering Ferrari Car Shipments Full Year 2013 First Half of Year 2014 2015 2012 2014 By Model Type Sports Cars V8 V12 Total 2,077 4,274 481 4,755 3,944 1,401 5,345 3,651 1.565 5,216 900 2,977 1,581 645 2,226 1,645 GT Cars V8 V12 Total 1,589 1,061 2,650 1,219 436 454 237 691 394 2,039 1,280 188 1,468 1,655 By Geography Europe, Middle East, and Africa United Kingdom Germany Switzerland Italy France Middle East Rest of EMEA Total EMEA Americas Americas Asia Pacific Greater China Rest of APAC Total APAC 686 755 366 318 330 423 825 3,703 686 659 350 206 273 472 663 3,309 705 616 332 243 253 521 604 3,274 408 353 181 132 138 232 349 1,793 456 214 155 139 129 185 320 1,598 2,208 2,382 2,462 1,199 1,287 789 705 1,494 572 737 1,309 7,000 675 844 1,519 7,255 289 387 676 261 548 809 Total 7,405 3,668 3,694 Exhibit 3 Ferrari: The 2015 Initial Public Offering Ferrari Income Statement (millions of euro) First Half 2015 2012 2013 2014 Sales Cars and Spare Parts (1) Engines (2) Sponsorship, Commercial and Brand (3) Other (4) Total Sales 1,695 77 385 69 2,225 1,655 188 412 80 2,335 1,944 311 417 21 2,762 1,007 121 212 46 1,387 Cost of Sales excluding Dep and Amort Depreciation & Amortization Expense Selling, General, and Admin. Expense Research & Development Other Operating Expense Operating Income (EBIT) 961 238 243 431 17 335 964 270 260 479 -2 364 1,217 289 300 541 26 389 592 130 152 291 4 218 Net Financial Income (Expense) Profit before Tax Income Tax Expense Net Profit -1 335 101 233 3 366 120 246 2 398 133 265 -27 191 65 126 Capital Expenditures 258 271 330 151 Exhibit 4 Ferrari: The 2015 Initial Public Offering Ferrari Balance Sheet (millions of euro) Cash and cash equivalents Trade receivables Receivables from financing activities Inventories Other current assets Total current assets Investments and other financial assets Deferred tax assets Property, plant, and equipment Intangible Assets (1) Goodwill 31-Dec-2013 798 206 863 238 115 2,219 37 42 568 242 787 3,895 31-Dec-2014 1,077 184 1,224 296 64 2,845 47 112 585 265 787 4,641 30-Jun-2015 258 154 1,181 352 100 2,045 48 149 589 283 787 3,900 Total assets 486 104 475 1,065 Trade payables Current tax payables Other current liabilities Total current liabilities Long-term debt Other liabilities Total equity Total liabilities and equity 536 110 774 1,420 510 233 2.478 4,641 578 182 836 1,595 2,267 239 -201 3,900 317 197 2.316 3,895 Exhibit 8 Ferrari: The 2015 Initial Public Offering Ferrari Forecast (millions of euro, except as noted) 2014 3.6% Assumptions Growth in Cars Shipped Growth in Revenue/Car Growth in Engine Revenue Growth in Other Revenue 2015 7.0% 5.0% 3.0% 3.0% 2016 5.0% 5.0% 3.0% 6.0% 2017 4.0% 5.0% 3.0% 6.0% 2018 4.0% 5.0% 3.0% 6.0% 2019 3.0% 5.0% 3.0% 6.0% Operating Margin-Cars Operating Margin-Engines Operating Margin-All Other Revenue 12.5% 13.0% 13.5% 9.1% 10.0% 10.0% 24.9% 25.0% 27.0% 14.0% 10.0% 28.0% 14.0% 10.0% 30.0% 14.0% 10.0% 30.0% Net Working Capital Turnover Net Fixed Asset Turnover Deprec & Amort/PPE 1.9 3.2 34% 2.0 3.2 34% 2.1 3.3 34% 2.2 3.5 34% 2.2 3.7 34% 2.2 3.8 34% Financial Forecast Car Shipments (000s) Avg Revenue per Car (Euro 000) Car Revenue Engine Revenue All other Revenue Total Revenue 7.26 268 1,944 311 507 2,762 7.76 281 2,184 320 523 3,027 8.15 295 2,408 330 554 3,292 8.48 310 2,629 340 587 3,556 8.82 326 2,871 350 623 3,844 9.08 342 3,105 361 660 4,126 284 368 Operating Profit-Cars Operating Profit-Engines Operating Profit-All Other Revenue Total Operating Profit 243 28 126 398 32 131 447 325 33 150 508 34 164 567 402 35 187 435 36 198 669 624 Net Working Capital Net PP&E and Int. Assets Dep & Amort 1,425 851 289 1,513 932 317 1,568 998 339 1,617 1,016 345 1,747 1,039 353 1,875 1,086 369 Exhibit 8 provides a base-case financial forecast for Ferrari based on Marchionne's volume-expansion forecast. The cost of capital had been estimated to be 5.0% in euro based on market data for comparable companies. This figure was consistent with the relatively low risk that analysts associated with Ferrari's expected cash flows. Although Ferrari was incorporated in the Netherlands, because the company headquarters and operations were in Italy, Ferrari profits would be taxed in Italy at a tax rate of 38%. Exhibit 1 Ferrari: The 2015 Initial Public Offering Ferrari Car Shipments Full Year 2013 First Half of Year 2014 2015 2012 2014 By Model Type Sports Cars V8 V12 Total 2,077 4,274 481 4,755 3,944 1,401 5,345 3,651 1.565 5,216 900 2,977 1,581 645 2,226 1,645 GT Cars V8 V12 Total 1,589 1,061 2,650 1,219 436 454 237 691 394 2,039 1,280 188 1,468 1,655 By Geography Europe, Middle East, and Africa United Kingdom Germany Switzerland Italy France Middle East Rest of EMEA Total EMEA Americas Americas Asia Pacific Greater China Rest of APAC Total APAC 686 755 366 318 330 423 825 3,703 686 659 350 206 273 472 663 3,309 705 616 332 243 253 521 604 3,274 408 353 181 132 138 232 349 1,793 456 214 155 139 129 185 320 1,598 2,208 2,382 2,462 1,199 1,287 789 705 1,494 572 737 1,309 7,000 675 844 1,519 7,255 289 387 676 261 548 809 Total 7,405 3,668 3,694 Exhibit 3 Ferrari: The 2015 Initial Public Offering Ferrari Income Statement (millions of euro) First Half 2015 2012 2013 2014 Sales Cars and Spare Parts (1) Engines (2) Sponsorship, Commercial and Brand (3) Other (4) Total Sales 1,695 77 385 69 2,225 1,655 188 412 80 2,335 1,944 311 417 21 2,762 1,007 121 212 46 1,387 Cost of Sales excluding Dep and Amort Depreciation & Amortization Expense Selling, General, and Admin. Expense Research & Development Other Operating Expense Operating Income (EBIT) 961 238 243 431 17 335 964 270 260 479 -2 364 1,217 289 300 541 26 389 592 130 152 291 4 218 Net Financial Income (Expense) Profit before Tax Income Tax Expense Net Profit -1 335 101 233 3 366 120 246 2 398 133 265 -27 191 65 126 Capital Expenditures 258 271 330 151 Exhibit 4 Ferrari: The 2015 Initial Public Offering Ferrari Balance Sheet (millions of euro) Cash and cash equivalents Trade receivables Receivables from financing activities Inventories Other current assets Total current assets Investments and other financial assets Deferred tax assets Property, plant, and equipment Intangible Assets (1) Goodwill 31-Dec-2013 798 206 863 238 115 2,219 37 42 568 242 787 3,895 31-Dec-2014 1,077 184 1,224 296 64 2,845 47 112 585 265 787 4,641 30-Jun-2015 258 154 1,181 352 100 2,045 48 149 589 283 787 3,900 Total assets 486 104 475 1,065 Trade payables Current tax payables Other current liabilities Total current liabilities Long-term debt Other liabilities Total equity Total liabilities and equity 536 110 774 1,420 510 233 2.478 4,641 578 182 836 1,595 2,267 239 -201 3,900 317 197 2.316 3,895 Exhibit 8 Ferrari: The 2015 Initial Public Offering Ferrari Forecast (millions of euro, except as noted) 2014 3.6% Assumptions Growth in Cars Shipped Growth in Revenue/Car Growth in Engine Revenue Growth in Other Revenue 2015 7.0% 5.0% 3.0% 3.0% 2016 5.0% 5.0% 3.0% 6.0% 2017 4.0% 5.0% 3.0% 6.0% 2018 4.0% 5.0% 3.0% 6.0% 2019 3.0% 5.0% 3.0% 6.0% Operating Margin-Cars Operating Margin-Engines Operating Margin-All Other Revenue 12.5% 13.0% 13.5% 9.1% 10.0% 10.0% 24.9% 25.0% 27.0% 14.0% 10.0% 28.0% 14.0% 10.0% 30.0% 14.0% 10.0% 30.0% Net Working Capital Turnover Net Fixed Asset Turnover Deprec & Amort/PPE 1.9 3.2 34% 2.0 3.2 34% 2.1 3.3 34% 2.2 3.5 34% 2.2 3.7 34% 2.2 3.8 34% Financial Forecast Car Shipments (000s) Avg Revenue per Car (Euro 000) Car Revenue Engine Revenue All other Revenue Total Revenue 7.26 268 1,944 311 507 2,762 7.76 281 2,184 320 523 3,027 8.15 295 2,408 330 554 3,292 8.48 310 2,629 340 587 3,556 8.82 326 2,871 350 623 3,844 9.08 342 3,105 361 660 4,126 284 368 Operating Profit-Cars Operating Profit-Engines Operating Profit-All Other Revenue Total Operating Profit 243 28 126 398 32 131 447 325 33 150 508 34 164 567 402 35 187 435 36 198 669 624 Net Working Capital Net PP&E and Int. Assets Dep & Amort 1,425 851 289 1,513 932 317 1,568 998 339 1,617 1,016 345 1,747 1,039 353 1,875 1,086 369