Year $0123$

Sales revenue $104402352014593$

Variable costs $5220117607296$

Fixed costs $260026002600$

Initial investment $12900$

Net working capital $216864441$

Of the initial investment, EUR $7\mathrm{.}8$ million is the acquisition cost of the equipment, which will be depreciated in full as straight$-$line depreciation over $3$ years. The remainder of the initial investment is for development expenses that the enterprise deducts from its profit immediately. The company's income tax rate is $20\%.$

Treat each question separately from the other sections. $($So DO NOT calculate the cumulative effect!$)$

a$)$Calculate the NPV of the investment $[$k$].$

b$)$Calculate the NPV $[$k$]$ using $12\%$ as the opportunity cost of capital.

c$)$If the product is completed in year $0,$ but due to a possible licence dispute, equipment investments and the start of production and sales are delayed by one year, the company estimates that all revenues and costs as well as equipment investments will be postponed by one year. Under this assumption, what is the NPV of the investment $[$k$]?$

Due to competitors' actions, $2$nd year sales may be only $85\%$ of previously estimated, and as a result, revenue and variable costs are assumed to decrease by $15\%$ from previously estimated figures for that year. Net working capital is assumed to remain unchanged. How much does this assumption increase $(+)$ or decrease $(-)$ the NPV $[$k$]$ of the investment you calculated in a$?$

In order to maintain the sales volume according to the original plan, the company will have to reduce the sales price by $7\%$ in year $2.$ No changes are assumed in the values of other years. Net working capital is assumed to remain unchanged. How much does this assumption increase $(+)$ or decrease $(-)$ the NPV $[$k$]$ of the investment you calculated in a$?$

If the equipment purchased for the investment can be sold for $540$ k$$ in year $4,$ how much does this assumption add $(+)$ or decrease $(-)$ the NPV $[$k$]$ of the investment you calculated in a$?$

If the company uses its existing capacity in production, the equipment investment will be halved, but the company will have to stop selling and manufacturing the existing product OLD one year earlier than planned. Previously, it was planned that termination would be carried out only after year $1.$ In the company's budget for year $1,$ OLD's sales revenue is $11$ M$$ and the profit margin is $46\%.$ How much does this assumption increase $(+)$ or decrease $(-)$ the NPV $[$k$]$ of the investment you calculated in a