Estimated Cash Flows for the Segway People Scenario Analysis: Estimated Cash Flows for the Segway People Mover Base Case Year 0 Years 1-12 BicycleScenarion Year 0 Years 1-12 Investmenet -5

Estimated Cash Flows for the Segway People

Scenario Analysis: Estimated Cash Flows for the Segway People Mover

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

Investmenet -5,400 Investment -5,400

Sales 16,000 Sales

Variable Cost 13,000 Variable Cost

Fixed cost 2,000 Fixed cost

Depreciati on 450 Depreciay on

Preas profit 550 Pretax Profit

Taxes @ 40% 220 Taxes @ 40%

Profit after tax 330 Profit after tax

Operation cash flow 780 Operating cash flow

Net cash flow 780 Net Cahs Flow

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

Consider the scenario in which a competing form of transportation, the bicycle, causes sales to drop to 90% of expected sales from the base case.

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

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

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Scenario Analysis: Estimated Cash Flows for the Segway People
Consider the scenario in which a competing form of transportation, the bicycle, causes sales to
drop to 90% of expected sales from the base case.
a.
Fill in the table on the right, including NPV
b.
What is maximum opportunity cost of capital in both the Base Case and the Bicycle
Scenario such that you should undertake the Segway People Mover Project?

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