Question: a.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

a.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%.

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