ANSWER

A. Year1 Year2
Q1 Q2 Q3 Q4 Q1 Q2
Development -533.3 -533.3 -533.3 -533.3
Pilot Testing -100.0 -100.0
Ramp-Up -200.0 -200.0
Marketing & Support -37.5 -37.5 -37.5
Production Volume 15 15
Unit Production Cost -100 -100
Production Cost -1,500 -1,500
Sales Volume 15 15
Unit Price (dollars) 240 240
Sales Revenue 3,600 3,600
Period Cost Flow -533.3 -533.3 -833.3 -337.5 2,062.5 2,062.5
PV Year (r= 8%) -2,237.5 7638.888889
Project NPV
 Year2 Year3 Year4
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

-37.5 -37.5 -37.5 -37.5 -37.5 -37.5 -37.5 -37.5

15 15 15 15 15 15 15 15
-100 -100 -100 -100 -100 -100 -100 -100
-1,500 -1,500 -1,500 -1,500 -1,500 -1,500 -1,500 -1,500
15 15 15 15 15 15 15 15
240 240 240 240 240 240 240 240
3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600
2,062.5 2,062.5 2,062.5 2,062.5 2,062.5 2,062.5 2,062.5 2,062.5
7638.888889 7073.045267 6549.115988
19023.55014
 Year4
Q3 Q4

-37.5 -37.5
15 15
-100 -100
-1,500 -1,500
15 15
240 240
3,600 3,600
2,062.5 2,062.5
6549.115988
ANSWER
Changes by 50.000

B. Year1
Q1 Q2 Q3 Q4
Development -533.3 -533.3 -533.3 -533.3
Pilot Testing -100.0 -100.0
Ramp-Up -200.0 -200.0
Marketing & Support -37.5
Production Volume
Unit Production Cost
Production Cost
Sales Volume
Unit Price (dollars)
Sales Revenue
Period Cost Flow -533.3 -533.3 -833.3 -337.5
PV Year (r= 8%) -1170.83333
Project NPV

ANSWER
Changes by 70.000

B. 2. Year1
Q1 Q2 Q3 Q4
Development -533.3 -533.3 -533.3 -533.3
Pilot Testing -100.0 -100.0
Ramp-Up -200.0 -200.0
Marketing & Support -37.5
Production Volume
Unit Production Cost
Production Cost
Sales Volume
Unit Price (dollars)
Sales Revenue
Period Cost Flow -533.3 -533.3 -833.3 -337.5
PV Year (r= 8%) -2,237.5
Project NPV
 Year2 Year3
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

-37.5 -37.5 -37.5 -37.5 -37.5 -37.5 -37.5 -37.5

12.5 12.5 12.5 12.5 12.5 12.5 12.5 12.5
100 100 100 100 100 100 100 100
-1,250 -1,250 -1,250 -1,250 -1,250 -1,250 -1,250 -1,250
12.5 12.5 12.5 12.5 12.5 12.5 12.5 12.5
240 240 240 240 240 240 240 240
3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000
1712.5 1712.5 1712.5 1712.5 1712.5 1712.5 1712. 1712.5
6342.592593 5872.770919
16482.28103

Year2 Year3
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

-37.5 -37.5 -37.5 -37.5 -37.5 -37.5 -37.5 -37.5

17.5 17.5 17.5 17.5 17.5 17.5 17.5 17.5
-100 -100 -100 -100 -100 -100 -100 -100
-1,750 -1,750 -1,750 -1,750 -1,750 -1,750 -1,750 -1,750
17.5 17.5 17.5 17.5 17.5 17.5 17.5 17.5
240 240 240 240 240 240 240 240
4,200 4,200 4,200 4,200 4,200 4,200 4,200 4,200
2412.5 2412.5 2412.5 2412.5 2412.5 2412.5 2412.5 2412.5
8935.185185 8273.319616
22631.48593
 Year4
Q1 Q2 Q3 Q4

-37.5 -37.5 -37.5 -37.5

12.5 12.5 12.5 12.5
100 100 100 100
-1,250 -1,250 -1,250 -1,250
12.5 12.5 12.5 12.5
240 240 240 240
3,000 3,000 3,000 3,000
1712.5 1712.5 1712.5 1712.5
5437.750851

Year4
Q1 Q2 Q3 Q4

-37.5 -37.5 -37.5 -37.5

17.5 17.5 17.5 17.5
-100 -100 -100 -100
-1,750 -1,750 -1,750 -1,750
17.5 17.5 17.5 17.5
240 240 240 240
4,200 4,200 4,200 4,200
2412.5 2412.5 2412.5 2412.5
7660.481126
9% PV Year (r= 9%) -2,237.5 7568.807339
Project NPV

10% PV Year (r= 10%) -2,237.5 7500

Project NPV

11% PV Year (r= 11%) -2,237.5 7432.432432

Project NPV

based on period cost flow from A ( 2062.5)

7568.807339 6943.859944 6370.5137
18645.68099

7500 6818.1818 6198.347

18279.02893

7432.432432 6695.885074 6032.3288

17923.1464
6370.513711

6198.3471

6032.328896