Estimates for the electric scooter project

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Reference no: EM131177120

Roderick Electric Scooter, Inc., staff has come up with the following estimates for the electric scooter project:

Pessimistic Expected Optimistic

Market size 2.5 million 3.0 million 3.2 million

Market share 0.4 0.1 0.16

Unit price $300 $375 $400

Unit variable cost $350 $300 $275

Fixed cost $5 million $3million $1million

Conduct sensitivity analysis. What are the principal uncertainties in the project? Assume an initial investment of $16 million to be depreciated over a period of 10 years to a salvage value of zero. Corporate Tax rate is 34%. Assume a cost of capital of 10%.

Reference no: EM131177120

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