Corporate Financial Planning Car Type 1 completed
xlsx
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School
University of Illinois, Chicago *
*We aren’t endorsed by this school
Course
420
Subject
Industrial Engineering
Date
Dec 6, 2023
Type
xlsx
Pages
34
Uploaded by CommodoreArt2331
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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