Scenario analysis evaluated cash flows for the segway

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Reference no: EM13352123

Scenario Analysis: Evaluated Cash Flows for the Segway People Mover

Base Case Year 0 Years 1-12 BicycleScenarion Year 0 Years 1-12

Investment -5,400 Investment -5,400

Sales 16,000 Sales

Variable Cost 13,000 Variable Cost

Fixed cost 2,000 Fixed cost

Depreciation 450 Depreciation

Pretax profit 550 Pretax Profit

Taxes @ 40% 220 Taxes @ 40%

Profit after tax 330 Profit after tax

Operation cash flow780 Operating cash flow

Net cash flow 780 Net Cahs Flow

NPV (OCCof 9%): $185.37 -5,400 NPV (OCCof 9%): -5,400

Suppose the scenario in which a competing form of transportation, the bicycle, causes sales to fall to 90% of predicated sales from the base case.

a. Fill in the table on the right, with NPV

b. Evaluate maximum opportunity cost of capital in both the Base Case and the Bicycle Scenario such that you could undertake the Segway People Mover Project?

Reference no: EM13352123

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