Windsor Metal Company (WMC), a small manufacturer of fabricated metal parts, must decide whether to enter the competition to become the supplier of transmission housings for Gulf Electric, a company that produces the housings in its own in-house manufacturing facility but has almost reached its maximum production capacity. Therefore, Gulf is looking for an outside supplier. To compete, WMC must design a new fixture for the production process and purchase a new forge. The available details for this purchase are on the following slide.

Financial Facts

Known with Great Confidence

Required investment = $100,000

Fixed cost = $15,000/Yr

Project Life = 5 years

Income tax rate = 40%

MARR = 10%

Unknown but Predictable (Most Likely Values)

Q: Number of units = 1,900 units

P: Unit Price = $48 per unit

VC: Unit variable cost = $20 per unit

S: Salvage value = $30,000

1. Conduct a sensitivity analysis for each of the four key uncertain variables Q, P, VC and S in the range of -20% to 20% around the most likely value ( the incremental is 2%). Present your result in both tables and scattered graphs. (40 marks)
2. Conduct a break-even analysis on Q. Use the goal-seeking function to find the break-even value of Q. (20marks)
3. The four unknown variables are normally distributed. The means and standard deviations are as follows: (40 marks)

Q: mean = 1,900 units; =200

P: mean = $48 per unit; =3

VC: mean = $20 per unit; =4

S: mean = $30,000; =5.000

Develop a simulation model on the project NPW with 300 iteration. Present your result in a table and histogram.