Corporate Financial Planning Car Type 1 completed

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University of Illinois, Chicago *

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420

Subject

Industrial Engineering

Date

Dec 6, 2023

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xlsx

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34

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Variable Production Cost: The variable cost incurred in producing a car Sales Price: The sales price is assumed to be $10,000 for each model If car sells well the first year, it pro MODEL/APPROACH 1: Based on Year 0 demand Demand (Year t) = Expected demand (Year 0) + Error Term Assume that errors are normally distributed random number with mean 0 and standard deviatio How do we use simulation to compare the merits of the two proposed compact car types? General Ford (GF) Auto Corporation is trying to determine what type of compact car to develop determine which compact car type should be built, information about the following quantities h Fixed Cost of Developing Car: This cost is assumed to be incurred at he beginning of year 1 (or end of year 0) before any sales are recorded Demand During Each of Next 10 years: For simplicity we'll assume that all sales occur at the end of each year. Interest Rate: It's assumed that cash flows are discounted at 10%. This means that a cash outflow of 1$ at the beginning of year 1 is equivalent to a cash outflow of $1.10 at the end of Year 1. Fixed and variable costs and annual sales are unknown. The views of marketing and engineering about these quantities are summarized in each worksheet A1:D18. For simplicity, we assume that the variable cost for each year's production is the same. This ignores inflation.
obably will sell well during the later years. GF has 3 models to co MODEL/APPROACH 2: Demand (Year t) = Demand (Year t-1) + Error Term on 20,000 p. Two types of cars (Car 1 & Car 2) are under consideration. Each m has been gathered through focus groups with the marketing and e
ompare: MODEL/APPROACH 3: Assume demand grows by 5% yearly Demand (Year t) = 1.05 * Demand (Year t-1) + Error Term model is assumed to generate sales for 10 years. In order to engineering departments.
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Fixed cost for Car 1 Fixed cost for Car 2 Value Probability Value Probability $6,000,000,000 0.5 $4,000,000,000 0.25 $8,000,000,000 0.5 $5,000,000,000 0.5 $16,000,000,000 0.25 Variable Cost for Car 1 Variable Cost for Car 2 Value Probability Value Probability $4,600 0.5 $2,000 0.5 $5,400 0.5 $6,000 0.5 value Probability Value Probability 230,000 0.25 80,000 0.25 250,000 0.5 220,000 0.5 270,000 0.25 390,000 0.25 interest rate 0.1 price 10,000 Error ~ N(0,2 year1 year2 year3 year4 year5 6000000000 4600 -45712 -35705 -19462 490 13353 6000000000 4600 12091 48182 4931 198 -7607 6000000000 4600 -1129 -15625 -878 -17015 -22716 8000000000 5400 -14593 1115 1999 -31839 6314 8000000000 5400 -6617 23948 -9288 1543 -1370 6000000000 4600 27445 1328 4019 -19629 -1700 8000000000 5400 14840 2666 -7041 -11001 -1849 6000000000 4600 -19273 12028 -8033 -29424 -12280 8000000000 5400 1502 70455 16173 23774 740 6000000000 4600 8927 -7054 13723 4354 -5207 8000000000 5400 12523 44708 13244 -25609 -25967 8000000000 5400 13199 -11722 -5348 -26407 15124 8000000000 5400 -13191 13392 -122 12575 2064 8000000000 5400 -15600 -4555 9782 -19400 8952 6000000000 4600 -4895 -21959 5984 -18588 21884 6000000000 4600 -22585 18238 -5652 -17354 -2321 6000000000 4600 -14458 20371 31147 8241 7062 6000000000 4600 -41168 33963 -2478 27802 4029 8000000000 5400 1081 5904 4252 -8979 -2373 6000000000 4600 -26262 -11895 15220 -10287 7490 6000000000 4600 29925 17890 18333 13070 37870 6000000000 4600 -32659 25249 25457 6239 12382 6000000000 4600 -2464 -9697 -29869 -35054 -21679 6000000000 4600 20192 -4008 -24620 -18078 20617 6000000000 4600 2816 -30052 16577 -9027 3502 Year0 demand for car 1 (Number of cars) Year0 demand for car 2 (Number of cars) Fixed cost for Car 1 Variable Cost for Car 1
8000000000 5400 -19271 5512 -27734 4914 14177 8000000000 5400 -16339 -11597 6155 1813 6324 6000000000 4600 32618 -34836 530 50086 37368 8000000000 5400 -20273 5588 -6997 -6914 -14236 6000000000 4600 5663 -3513 15932 -26974 -22400
20000) year6 year7 year8 year9 year10 year1 year2 year3 -8061 13727 -32526 10969 -18942 230000 184288 194295 210538 -5195 -24008 -37194 9264 -14152 230000 242091 278182 234931 16067 26808 -7804 16331 -17167 230000 228871 214375 229122 5394 50521 -21898 -7482 3771 250000 235407 251115 251999 -34165 -9751 1918 -9103 -5111 250000 243383 273948 240712 -33247 -6441 -33138 37341 -18923 250000 277445 251328 254019 -708 -30978 -22576 23173 -12025 270000 284840 272666 262959 9343 -218 -16461 -15727 -3352 230000 210727 242028 221967 -647 9629 -27277 -6125 -31009 250000 251502 320455 266173 2472 -10261 -46942 9362 11438 230000 238927 222946 243723 3856 -11378 2649 3815 503 250000 262523 294708 263244 -20868 -44801 -13501 -16384 -7233 270000 283199 258278 264652 -21201 -35496 -2767 22167 -1775 250000 236809 263392 249878 -17046 -6160 -4862 5580 8751 250000 234400 245445 259782 -26071 22530 3518 4248 -19212 250000 245105 228041 255984 709 11335 12523 -42847 -36623 250000 227415 268238 244348 -7424 3132 -3876 -15423 11172 230000 215542 250371 261147 -22170 -19791 4079 5453 16805 230000 188832 263963 227522 6646 -27919 -8908 6987 901 250000 251081 255904 254252 -9258 -12354 13890 -31070 -26651 230000 203738 218105 245220 -7955 -4519 -30181 16554 -11902 250000 279925 267890 268333 7582 -5106 -2341 -2427 -15972 230000 197341 255249 255457 -21190 8478 8117 -34351 -14980 250000 247536 240303 220131 14889 58438 3314 28082 16294 230000 250192 225992 205380 22841 14494 -2310 -1916 -16017 230000 232816 199948 246577 Demand Year 0
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-25787 -13401 19283 21195 -8489 270000 250729 275512 242266 -2784 -1342 -17906 -7786 -6008 270000 253661 258403 276155 34739 -19029 11106 26680 -9123 250000 282618 215164 250530 -77 -37447 -22300 -9155 44131 270000 249727 275588 263003 -1534 6787 -5963 4740 1767 230000 235663 226487 245932
Simulated Demand year4 year5 year6 year7 year8 year9 year10 year0 year1 230490 243353 221939 243727 197474 240969 211058 -6000000000 995157535 230198 222393 224805 205992 192806 239264 215848 -6000000000 1307289705 212985 207284 246067 256808 222196 246331 212833 -6000000000 1235903639 218161 256314 255394 300521 228102 242518 253771 -8000000000 1082870205 251543 248630 215835 240249 251918 240897 244889 -8000000000 1119560204 230371 248300 216753 243559 216862 287341 231077 -6000000000 1498202034 258999 268151 269292 239022 247424 293173 257975 -8000000000 1310264617 200576 217720 239343 229782 213539 214273 226648 -6000000000 1137924511 273774 250740 249353 259629 222723 243875 218991 -8000000000 1156907039 234354 224793 232472 219739 183058 239362 241438 -6000000000 1290204374 224391 224033 253856 238622 252649 253815 250503 -8000000000 1207607331 243593 285124 249132 225199 256499 253616 262767 -8000000000 1302714337 262575 252064 228799 214504 247233 272167 248225 -8000000000 1089320596 230600 258952 232954 243840 245138 255580 258751 -8000000000 1078237830 231412 271884 223929 272530 253518 254248 230788 -6000000000 1323569134 232646 247679 250709 261335 262523 207153 213377 -6000000000 1228042081 238241 237062 222576 233132 226124 214577 241172 -6000000000 1163926747 257802 234029 207830 210209 234079 235453 246805 -6000000000 1019693265 241021 247627 256646 222081 241092 256987 250901 -8000000000 1154974600 219713 237490 220742 217646 243890 198930 203349 -6000000000 1100186547 263070 287870 242045 245481 219819 266554 238098 -6000000000 1511595563 236239 242382 237582 224894 227659 227573 214028 -6000000000 1065642138 214946 228321 228810 258478 258117 215649 235020 -6000000000 1336693770 211922 250617 244889 288438 233314 258082 246294 -6000000000 1351035627 220973 233502 252841 244494 227690 228084 213983 -6000000000 1257206401
274914 284177 244213 256599 289283 291195 261511 -8000000000 1153354189 271813 276324 267216 268658 252094 262214 263992 -8000000000 1166840058 300086 287368 284739 230971 261106 276680 240877 -6000000000 1526138819 263086 255764 269923 232553 247700 260845 314131 -8000000000 1148742105 203026 207600 228466 236787 224037 234740 231767 -6000000000 1272580154
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Net Cash Value (NCV) year2 year3 year4 year5 year6 year7 year8 1049193308 1136907878 1244648158 1314107532 1198470419 1316123118 1066359184 1502183442 1268626703 1243069920 1200923599 1213948537 1112357660 1041153557 1157623130 1237260378 1150119198 1119336086 1328763011 1386761689 1199855889 1155129709 1159196137 1003539139 1179045586 1174814008 1382394814 1049270688 1260161618 1107274213 1157097606 1143699698 992840225 1105145977 1158821385 1357172421 1371704504 1244001994 1340822430 1170464054 1315216166 1171053407 1254264550 1209613121 1191396561 1233496679 1238744264 1099499824 1138149875 1306952792 1198622792 1083111530 1175685681 1292451035 1240822645 1153109671 1474090943 1224396212 1259358771 1153403629 1147026034 1194292051 1024525292 1203910266 1316102245 1265511730 1213880270 1255347853 1186592510 988515532 1355656106 1210924567 1032197944 1030549576 1167735647 1097659917 1162186420 1188080056 1217397582 1120526141 1311569087 1146007027 1035913812 1179896159 1211600963 1149440433 1207847265 1159493283 1052477475 986717834 1137273782 1129047943 1194996686 1060759061 1191179605 1071589551 1121663651 1127636999 1231421036 1382312728 1249622699 1468172065 1209216932 1471661278 1368996552 1448484006 1319480009 1256290732 1337467663 1353830178 1411209666 1417625997 1352002657 1410193365 1286499066 1280133689 1201907818 1258910612 1221070617 1425399643 1228618873 1392132164 1263755091 1122282357 1135129261 1264024965 1177157912 1169560357 1108695930 1139083326 1180573569 1021571199 1109022571 1177768428 1324185829 1186451065 1282446407 1192009151 1175286272 1317003954 1446608146 1448998462 1420576443 1554498465 1307043319 1325599085 1187024370 1378342787 1379468205 1275689112 1308863768 1282943060 1214426895 1229359492 1297633569 1188707463 1160708305 1232933953 1235574989 1395779311 1393834325 1220354554 1109053848 1144376940 1353329437 1322398127 1557562938 1259898269 1079717842 1331517989 1193256614 1260912569 1365343389 1320266512 1229525862
1267354539 1114423414 1264602203 1307215554 1123378571 1180355004 1330701663 1188655626 1270314175 1250340680 1271090038 1229195652 1235826673 1159630748 1161887010 1352863026 1620465680 1551785479 1537587975 1247244170 1409972026 1267705654 1209815193 1210196535 1176512716 1241644597 1069744687 1139417738 1223028741 1328034916 1096340776 1121037350 1233717632 1278651222 1209799617
Net Present Value year9 year10 NPV 1301231161 1139710986 $1,132,641 1292027561 1165580617 $1,716,861 1330185193 1149298034 $1,519,055 1115583411 1167348552 ($987,262) 1108126846 1126489939 ($1,035,979) 1551644034 1247814369 $2,217,480 1348597963 1186686579 ($459,956) 1157072576 1223900737 $1,351,740 1121825978 1007359671 ($631,350) 1292552453 1303763535 $1,604,269 1167549264 1152312108 ($823,098) 1166633385 1208728064 ($649,773) 1251968726 1141835975 ($997,695) 1175669046 1190255954 ($1,060,706) 1372936865 1246252584 $2,163,785 1118628040 1152236853 $2,061,720 1158717361 1302328953 $1,796,148 1271446633 1332746789 $1,622,353 1182139938 1154143199 ($979,609) 1074222129 1098085997 $1,344,365 1439389805 1285728893 $2,671,805 1228893536 1155749480 $1,715,969 1164505209 1269110624 $1,786,129 1393644836 1329989356 $1,929,253 1231652811 1155510546 $1,623,200
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1339497841 1202948944 ($498,919) 1206182925 1214363894 ($510,495) 1494074602 1300734546 $2,735,246 1199884820 1445003656 ($594,593) 1267597424 1251542355 $1,547,363 MEAN 776,998 STD 1,333,255 0.9 Z value=> 1.64485362695147 CI lower 376,611 CI upper 1,177,385
Fixed cost for Car 1 Fixed cost for Car 2 Value Probability Value Probability $6,000,000,000 0.5 $4,000,000,000 0.25 $8,000,000,000 0.5 $5,000,000,000 0.5 $16,000,000,000 0.25 Variable Cost for Car 1 Variable Cost for Car 2 Value Probability Value Probability $4,600 0.5 $2,000 0.5 $5,400 0.5 $6,000 0.5 value Probability Value Probability 230,000 0.25 80,000 0.25 250,000 0.5 220,000 0.5 270,000 0.25 390,000 0.25 interest rate 0.1 price 10,000 Error ~ N(0,2000 Fixed cost for Car 1 year1 year2 year3 year4 year5 6000000000 4600 -45712 -35705 -19462 490 13353 6000000000 4600 12091 48182 4931 198 -7607 6000000000 4600 -1129 -15625 -878 -17015 -22716 8000000000 5400 -14593 1115 1999 -31839 6314 8000000000 5400 -6617 23948 -9288 1543 -1370 6000000000 4600 27445 1328 4019 -19629 -1700 8000000000 5400 14840 2666 -7041 -11001 -1849 6000000000 4600 -19273 12028 -8033 -29424 -12280 8000000000 5400 1502 70455 16173 23774 740 6000000000 4600 8927 -7054 13723 4354 -5207 8000000000 5400 12523 44708 13244 -25609 -25967 8000000000 5400 13199 -11722 -5348 -26407 15124 8000000000 5400 -13191 13392 -122 12575 2064 8000000000 5400 -15600 -4555 9782 -19400 8952 6000000000 4600 -4895 -21959 5984 -18588 21884 6000000000 4600 -22585 18238 -5652 -17354 -2321 6000000000 4600 -14458 20371 31147 8241 7062 6000000000 4600 -41168 33963 -2478 27802 4029 8000000000 5400 1081 5904 4252 -8979 -2373 6000000000 4600 -26262 -11895 15220 -10287 7490 6000000000 4600 29925 17890 18333 13070 37870 6000000000 4600 -32659 25249 25457 6239 12382 6000000000 4600 -2464 -9697 -29869 -35054 -21679 6000000000 4600 20192 -4008 -24620 -18078 20617 Year0 demand for car 1 (Number of cars) Year0 demand for car 2 (Number of cars) Variable Cost for Car 1
6000000000 4600 2816 -30052 16577 -9027 3502 8000000000 5400 -19271 5512 -27734 4914 14177 8000000000 5400 -16339 -11597 6155 1813 6324 6000000000 4600 32618 -34836 530 50086 37368 8000000000 5400 -20273 5588 -6997 -6914 -14236 6000000000 4600 5663 -3513 15932 -26974 -22400 0 0 0 0 0 0 0 Err:509 Err:509 Err:509 Err:509 Err:509 Err:509 Err:509
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Demand 00) year6 year7 year8 year9 year10 Sales year1 year2 year3 year4 -8061 13727 -32526 10969 -18942 230000 184288 148583 129122 129612 -5195 -24008 -37194 9264 -14152 230000 242091 290273 295204 295402 16067 26808 -7804 16331 -17167 230000 228871 213246 212368 195353 5394 50521 -21898 -7482 3771 250000 235407 236522 238521 206682 -34165 -9751 1918 -9103 -5111 250000 243383 267331 258043 259586 -33247 -6441 -33138 37341 -18923 250000 277445 278773 282792 263163 -708 -30978 -22576 23173 -12025 270000 284840 287506 280466 269465 9343 -218 -16461 -15727 -3352 230000 210727 222755 214722 185298 -647 9629 -27277 -6125 -31009 250000 251502 321956 338129 361903 2472 -10261 -46942 9362 11438 230000 238927 231873 245596 249950 3856 -11378 2649 3815 503 250000 262523 307231 320476 294867 -20868 -44801 -13501 -16384 -7233 270000 283199 271477 266129 239721 -21201 -35496 -2767 22167 -1775 250000 236809 250200 250079 262654 -17046 -6160 -4862 5580 8751 250000 234400 229845 239627 220226 -26071 22530 3518 4248 -19212 250000 245105 223146 229130 210542 709 11335 12523 -42847 -36623 250000 227415 245653 240001 222648 -7424 3132 -3876 -15423 11172 230000 215542 235913 267060 275300 -22170 -19791 4079 5453 16805 230000 188832 222795 220317 248119 6646 -27919 -8908 6987 901 250000 251081 256985 261238 252258 -9258 -12354 13890 -31070 -26651 230000 203738 191844 207063 196776 -7955 -4519 -30181 16554 -11902 250000 279925 297816 316149 329218 7582 -5106 -2341 -2427 -15972 230000 197341 222590 248047 254286 -21190 8478 8117 -34351 -14980 250000 247536 237838 207969 172915 14889 58438 3314 28082 16294 230000 250192 246183 221564 203485
22841 14494 -2310 -1916 -16017 230000 232816 202764 219341 210315 -25787 -13401 19283 21195 -8489 270000 250729 256241 228507 233421 -2784 -1342 -17906 -7786 -6008 270000 253661 242064 248220 250033 34739 -19029 11106 26680 -9123 250000 282618 247783 248313 298399 -77 -37447 -22300 -9155 44131 270000 249727 255315 248318 241404 -1534 6787 -5963 4740 1767 230000 235663 232150 248082 221108 0 0 0 0 0 0 Err:509 Err:509 Err:509 Err:509 Err:509 Err:509
(Year t) = Demand (Year t-1) + Error Term Simulated Demand year5 year6 year7 year8 year9 year10 year0 year1 year2 142966 134905 148631 116105 127074 108131 -6000000000 995157535 802350843 287795 282600 258593 221399 230663 216511 -6000000000 1307289705 1567473147 172637 188705 215512 207708 224039 206872 -6000000000 1235903639 1151526769 212996 218390 268911 247013 239531 243303 -8000000000 1082870205 1087999914 258216 224051 214300 216218 207115 202004 -8000000000 1119560204 1229721822 261464 228216 221775 188636 225978 207055 -6000000000 1498202034 1505374455 267616 266909 235930 213354 236528 224503 -8000000000 1310264617 1322529167 173018 182361 182143 165682 149954 146603 -6000000000 1137924511 1202877303 362643 361996 371625 344348 338223 307214 -8000000000 1156907039 1480997982 244742 247214 236954 190012 199374 210811 -6000000000 1290204374 1252114641 268899 272755 261376 264026 267841 268343 -8000000000 1207607331 1413263437 254845 233977 189176 175675 159291 152058 -8000000000 1302714337 1248794394 264718 243517 208021 205255 227422 225647 -8000000000 1089320596 1150921559 229179 212133 205973 201111 206691 215443 -8000000000 1078237830 1057285774 232425 206355 228884 232402 236650 217437 -6000000000 1323569134 1204990169 220327 221036 232371 244895 202048 165425 -6000000000 1228042081 1326526087 282362 274938 278069 274193 258771 269943 -6000000000 1163926747 1273929403 252148 229978 210187 214266 219719 236524 -6000000000 1019693265 1203092908 249885 256532 228612 219704 226691 227592 -8000000000 1154974600 1182132511 204266 195009 182654 196544 165474 138823 -6000000000 1100186547 1035954976 367088 359133 354615 324434 340988 329086 -6000000000 1511595563 1608203709 266668 274250 269144 266803 264376 248403 -6000000000 1065642138 1201984925 151236 130047 138524 146642 112291 97311 -6000000000 1336693770 1284327338 224102 238990 297428 300743 328825 345119 -6000000000 1351035627 1329390181
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213817 236658 251152 248842 246926 230909 -6000000000 1257206401 1094924243 247598 221811 208409 227692 248888 240398 -8000000000 1153354189 1178708728 256357 253573 252231 234325 226538 220531 -8000000000 1166840058 1113495684 335767 370505 351476 362582 389263 380140 -6000000000 1526138819 1338025829 227168 227091 189644 167343 158188 202319 -8000000000 1148742105 1174447759 198708 197174 203961 197998 202738 204506 -6000000000 1272580154 1253608895
Net Cash Value (NCV) year3 year4 year5 year6 year7 year8 year9 697258721 699906879 772014411 728484830 802607948 626967132 686198293 1594099851 1595169771 1554093371 1526041907 1396399568 1195553124 1245580685 1146787146 1054906344 932242430 1019005442 1163767130 1121623019 1209808212 1097196052 950735191 979780777 1004594785 1236989598 1136260286 1101843697 1186996034 1194093640 1187793338 1030633563 985779540 994600925 952727771 1527078959 1421080954 1411903384 1232367438 1197583604 1018637010 1220281044 1290142288 1239538848 1231035528 1227779791 1085279616 981429491 1088027454 1159500095 1000611625 934297306 984748341 983570987 894680658 809753234 1555394194 1664752965 1668156594 1665182628 1709474679 1583999971 1555825949 1326216886 1349728615 1321608885 1334956739 1279549248 1026064780 1076617233 1474188004 1356385948 1236935524 1254671171 1202331088 1214517508 1232066772 1224191976 1102718117 1172287204 1076294231 870208043 808104202 732737587 1150361993 1208209257 1217702540 1120180015 956897849 944171631 1046140357 1102282460 1013041521 1054221127 975810678 947474329 925111328 950780374 1237302897 1136925596 1255097661 1114314593 1235975872 1254972424 1277909289 1296006096 1202296828 1189764491 1193594669 1254804336 1322430332 1091058373 1442122768 1486621833 1524755523 1484663341 1501573953 1480644570 1397361931 1189711781 1339843945 1361599035 1241881393 1135010654 1157035619 1186482252 1201692869 1160388799 1149472125 1180045694 1051616893 1010639464 1042779401 1118140805 1062591870 1103038277 1053047428 986333700 1061337654 893559783 1707202171 1777778614 1982277079 1939320398 1914919483 1751943853 1841333658 1339453130 1373142242 1440006010 1480949069 1453375964 1440735456 1427628992 1123034801 933743106 816677059 702252048 748031359 791865684 606370893 1196444029 1098820968 1210150405 1290548532 1606111470 1624009739 1775654575
1184442232 1135698846 1154611415 1277954804 1356221316 1343747178 1333399988 1051132141 1073734344 1138949898 1020328470 958683474 1047385137 1144882978 1141809859 1150150539 1179240577 1166436229 1160262902 1077893650 1042076575 1340888855 1611354535 1813140013 2000727989 1897972159 1957944185 2102018786 1142262951 1110459486 1044972202 1044616799 872361485 769779223 727664043 1339643810 1193984587 1073021937 1064739569 1101390791 1069190409 1094787832 0.9
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Net Present Value year10 NPV 583909279 ($1,319,247) 1169161302 $2,850,770 1117106246 $875,600 1119192249 ($1,403,629) 929217710 ($1,207,085) 1118095413 $2,334,712 1032714032 ($568,150) 791653971 $289,895 1413185620 $1,377,929 1138380768 $1,730,935 1234378880 ($41,920) 699465651 ($1,371,322) 1037976333 ($1,205,263) 991036329 ($1,717,417) 1174161873 $1,527,916 893295226 $1,488,057 1457690884 $2,610,525 1277229041 $1,394,538 1046922600 ($1,040,816) 749645780 $370,733 1777062550 $4,791,690 1341378472 $2,176,994 525481516 ($125,363) 1863643931 $2,509,557
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1246910535 $1,520,746 1105831922 ($1,278,646) 1014440469 ($1,053,630) 2052753332 $4,426,630 930667699 ($1,655,728) 1104330187 $1,236,250 MEAN 650,842 STD 1,818,063 Z value=> 1.64485362695147 CI lower 104,863 CI upper 1,196,820
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Fixed cost for Car 1 Fixed cost for Car 2 Value Probability Value Probability $6,000,000,000 0.5 $4,000,000,000 0.25 $8,000,000,000 0.5 $5,000,000,000 0.5 $16,000,000,000 0.25 Variable Cost for Car 1 Variable Cost for Car 2 Value Probability Value Probability $4,600 0.5 $2,000 0.5 $5,400 0.5 $6,000 0.5 value Probability Value Probability 230,000 0.25 80,000 0.25 250,000 0.5 220,000 0.5 270,000 0.25 390,000 0.25 interest rate 0.1 growth 1.05 price 10,000 Error ~ N(0,20000) Fixed cost for Car 1 year1 year2 year3 year4 year5 year6 6000000000 4600 -45712 -35705 -19462 490 13353 -8061 6000000000 4600 12091 48182 4931 198 -7607 -5195 6000000000 4600 -1129 -15625 -878 -17015 -22716 16067 8000000000 5400 -14593 1115 1999 -31839 6314 5394 8000000000 5400 -6617 23948 -9288 1543 -1370 -34165 6000000000 4600 27445 1328 4019 -19629 -1700 -33247 8000000000 5400 14840 2666 -7041 -11001 -1849 -708 6000000000 4600 -19273 12028 -8033 -29424 -12280 9343 8000000000 5400 1502 70455 16173 23774 740 -647 6000000000 4600 8927 -7054 13723 4354 -5207 2472 8000000000 5400 12523 44708 13244 -25609 -25967 3856 8000000000 5400 13199 -11722 -5348 -26407 15124 -20868 8000000000 5400 -13191 13392 -122 12575 2064 -21201 8000000000 5400 -15600 -4555 9782 -19400 8952 -17046 6000000000 4600 -4895 -21959 5984 -18588 21884 -26071 6000000000 4600 -22585 18238 -5652 -17354 -2321 709 6000000000 4600 -14458 20371 31147 8241 7062 -7424 6000000000 4600 -41168 33963 -2478 27802 4029 -22170 8000000000 5400 1081 5904 4252 -8979 -2373 6646 6000000000 4600 -26262 -11895 15220 -10287 7490 -9258 6000000000 4600 29925 17890 18333 13070 37870 -7955 6000000000 4600 -32659 25249 25457 6239 12382 7582 6000000000 4600 -2464 -9697 -29869 -35054 -21679 -21190 6000000000 4600 20192 -4008 -24620 -18078 20617 14889 Year0 demand for car 1 (Number of cars) Year0 demand for car 2 (Number of cars) Variable Cost for Car 1
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6000000000 4600 2816 -30052 16577 -9027 3502 22841 8000000000 5400 -19271 5512 -27734 4914 14177 -25787 8000000000 5400 -16339 -11597 6155 1813 6324 -2784 6000000000 4600 32618 -34836 530 50086 37368 34739 8000000000 5400 -20273 5588 -6997 -6914 -14236 -77 6000000000 4600 5663 -3513 15932 -26974 -22400 -1534 0 0 0 0 0 0 0 0 Err:509 Err:509 Err:509 Err:509 Err:509 Err:509 Err:509 Err:509
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Simulated year7 year8 year9 year10 Sales year1 year2 year3 year4 year5 13727 -32526 10969 -18942 230000 195788 169873 158905 167341 189061 -24008 -37194 9264 -14152 230000 253591 314452 335106 352059 362055 26808 -7804 16331 -17167 230000 240371 236764 247725 243096 232535 50521 -21898 -7482 3771 250000 247907 261417 276487 258472 277710 -9751 1918 -9103 -5111 250000 255883 292625 297968 314409 328760 -6441 -33138 37341 -18923 250000 289945 305770 325078 321703 336088 -30978 -22576 23173 -12025 270000 298340 315923 324679 329912 344559 -218 -16461 -15727 -3352 230000 222227 245366 249602 232658 232011 9629 -27277 -6125 -31009 250000 264002 347656 381212 424046 445989 -10261 -46942 9362 11438 230000 250427 255894 282412 300886 310723 -11378 2649 3815 503 250000 275023 333482 363401 355962 347792 -44801 -13501 -16384 -7233 270000 296699 299812 309454 298520 328569 -35496 -2767 22167 -1775 250000 249309 275166 288802 315818 333673 -6160 -4862 5580 8751 250000 246900 254690 277206 271666 294202 22530 3518 4248 -19212 250000 257605 248527 266937 261695 296664 11335 12523 -42847 -36623 250000 239915 270149 278004 274551 285958 3132 -3876 -15423 11172 230000 227042 258765 302850 326233 349607 -19791 4079 5453 16805 230000 200332 244312 254049 294554 313310 -27919 -8908 6987 901 250000 263581 282664 301050 307123 320106 -12354 13890 -31070 -26651 230000 215238 214105 240030 241745 261322 -4519 -30181 16554 -11902 250000 292425 324937 359517 390562 447960 -5106 -2341 -2427 -15972 230000 208841 244532 282216 302565 330075 8478 8117 -34351 -14980 250000 260036 263340 246638 223916 213433 58438 3314 28082 16294 230000 261692 270768 259687 254593 287939 Demand (Year t) = 1.
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14494 -2310 -1916 -16017 230000 244316 226480 254381 258073 274479 -13401 19283 21195 -8489 270000 264229 282952 269366 287748 316313 -1342 -17906 -7786 -6008 270000 267161 268922 288524 304763 326325 -19029 11106 26680 -9123 250000 295118 275038 289321 353873 408934 -37447 -22300 -9155 44131 270000 263227 281976 289078 296618 297213 6787 -5963 4740 1767 230000 247163 256008 284741 272004 263204 0 0 0 0 0 Err:509 Err:509 Err:509 Err:509 Err:509
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d Demand year6 year7 year8 year9 year10 year0 year1 year2 year3 190453 213702 191861 212423 204102 -6000000000 1057257535 917313720 858087284 374964 369704 350995 377809 382548 -6000000000 1369389705 1698042633 1809571468 260229 300048 307246 338939 338719 -6000000000 1298003639 1278526950 1337713676 296990 362360 358580 369027 391250 -8000000000 1140370205 1202518425 1271840483 311033 316834 334593 342220 354220 -8000000000 1177060204 1346074832 1370652786 319645 329186 312507 365474 364825 -6000000000 1565702034 1651159557 1755422039 361079 348155 342987 383309 390450 -8000000000 1372364617 1453247397 1493522888 252954 265384 262192 259574 269201 -6000000000 1200024511 1324978529 1347850247 467641 500652 498408 517203 512055 -8000000000 1214407039 1599218334 1753575463 328731 334907 304711 329308 357211 -6000000000 1352304374 1381829859 1525023597 369038 376111 397566 421259 442825 -8000000000 1265107331 1534018803 1671644311 324130 295535 296811 295267 302798 -8000000000 1364814337 1379135111 1423489448 329156 310117 322857 361167 377450 -8000000000 1146820596 1265762589 1328491152 291866 300299 310453 331555 356884 -8000000000 1135737830 1171572665 1275147985 285426 322227 341856 363197 362144 -6000000000 1391069134 1342043626 1441458535 300965 327348 356239 331204 311142 -6000000000 1295542081 1458803191 1501223360 359663 380777 395940 400315 431502 -6000000000 1226026747 1397330740 1635390642 306806 302355 321552 343082 377042 -6000000000 1081793265 1319282571 1371865573 342758 331977 339667 363638 382720 -8000000000 1212474600 1300256241 1384829411 265131 266033 293224 276816 264006 -6000000000 1162286547 1156169303 1296163598 462403 481005 474875 515172 529028 -6000000000 1579095563 1754658487 1941389873 354161 366763 382761 399471 403473 -6000000000 1127742138 1320472032 1523963839 202915 221538 240733 218418 214360 -6000000000 1404193770 1422037027 1331846341 317224 391523 414414 463217 502672 -6000000000 1413135627 1462146962 1402308158 .05 * Demand (Year t-1) + Error Term
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311045 341091 355835 371711 374280 -6000000000 1319306401 1222989563 1373657030 306341 308257 342953 381296 391871 -8000000000 1215454189 1301581437 1239083923 339858 355509 355378 365360 377621 -8000000000 1228940058 1237042687 1327208996 464119 468297 502817 554639 573247 -6000000000 1593638819 1485207770 1562331184 311996 290149 282356 287319 345816 -8000000000 1210842105 1297089864 1329759550 274830 295359 304164 324112 342085 -6000000000 1334680154 1382442903 1537599963
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Net Cash Value (NCV) year4 year5 year6 year7 year8 year9 year10 903639806 1020929328 1028446214 1153991643 1036050408 1147084090 1102149280 1901119961 1955099559 2024803074 1996400888 1895374489 2040170774 2065759930 1312718557 1255690571 1405238111 1620261705 1659130680 1830272407 1829084061 1188971646 1277465815 1366153113 1666855583 1649469050 1697525913 1799750761 1446283031 1512296881 1430751950 1457435524 1539128685 1574211965 1629412503 1737195135 1814877322 1726085242 1777605670 1687539360 1973560362 1970052749 1517595593 1584972052 1660964919 1601512989 1577738513 1763223402 1796071151 1256354289 1252857685 1365951604 1433071830 1415835093 1401699424 1453685132 1950613006 2051547286 2151150684 2303000270 2292675576 2379135332 2355451770 1624786507 1677906102 1775149261 1808499233 1645439727 1778264166 1928940910 1637424471 1599845270 1697573181 1730111757 1828803764 1937793216 2036994985 1373190062 1511418652 1490996611 1359460254 1365329426 1358229282 1392868810 1452762974 1534894406 1514116601 1426540265 1485141060 1661366839 1736271157 1249664445 1353327273 1342583188 1381375998 1428081797 1525154933 1641668634 1413154161 1601983934 1541300063 1740026344 1846024214 1961262289 1955577988 1482575260 1544171686 1625210448 1767680637 1923690666 1788503239 1680165254 1761659240 1887875891 1942177504 2056196992 2138077458 2161698692 2330112579 1590591015 1691875657 1656751797 1632718648 1736379545 1852645155 2036024202 1412766811 1472488478 1576686471 1527091994 1562469164 1672732560 1760512386 1305422842 1411140392 1431706562 1436578162 1583411024 1494803705 1425629887 2109035810 2418986065 2496978688 2597426707 2564322413 2781928338 2856753648 1633851142 1782407467 1912470900 1980521340 2066906899 2157145780 2178752548 1209146963 1152538264 1095740166 1196306486 1299956135 1179459151 1157542732 1374800506 1554869968 1713011593 2114225111 2237834635 2501371203 2714429119
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1393596496 1482188890 1679641723 1841890321 1921510699 2007239045 2021111543 1323640322 1455037892 1409168358 1417981780 1577582532 1753959500 1802606419 1401910126 1501095671 1563346106 1635340084 1634737836 1680657654 1737054430 1910913424 2208244573 2506244777 2528801186 2715213271 2995048537 3095535509 1364444062 1367178981 1435182527 1334686340 1298838395 1321665134 1590752047 1468820738 1421299125 1484081713 1594937021 1642483490 1750205088 1847257697 MEAN STD 0.9 Z value=> CI lower CI upper
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Net Present Value NPV $182,501 $5,233,548 $2,798,043 $401,165 $708,514 $4,690,554 $1,527,092 $2,156,498 $3,732,042 $3,864,276 $2,091,944 $615,606 $685,608 $65,293 $3,626,477 $3,610,888 $4,837,563 $3,395,132 $887,220 $2,221,402 $7,506,624 $4,299,105 $1,779,251 $4,654,293
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$3,534,506 $616,990 $893,051 $6,969,043 $227,418 $3,273,688 2,702,844 2,028,555 1.64485362695147 2,093,653 3,312,035
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Model 1 Model 2 Model 3 MEAN 776,998 650,842 2,702,844 STD 1,333,255 1,818,063 2,028,555 CI lower 376,611 104,863 2,093,653 CI upper 1,177,385 1,196,820 3,312,035 dif 800,774 1,091,957 1,218,382
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