Company Easy Travel is a car maker targeting middle - class consumers. The company is considering a
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Question:
Company Easy Travel is a car maker targeting middleclass consumers. The company is considering a project in which a new type of electric car will be produced. The head of the marketing team has reported that the demand for environmentfriendly cars will significantly increase shortly based on their survey research.
Using the research data from the marketing team, you are in charge of evaluating the feasibility of this project through NPV analysis. You have reported your analysis to the Chief Executive Officer CEO of the company. The analysis shows a positive NPV and suggests taking the project.
However, the CEO still has some concerns about the project and requires you to provide further evidence on the feasibility of the project.
REQUIRED:
i Besides the calculation of NPV the CEO also wants to see a more intuitive number on sales eg how many cars to sell at which the project is at the edge of making a profit ie zero NPV Which further analysis should you do for it Please briefly describe your understanding of this approach. Which shortcomings should you mention in your feedback as warning messages for using the new analysis in decision-making?
ii If the project is taken, the product line will be used for years. Another concern of the CEO is that how robust the positive NPV would be given some significant changes in economic status in the following years eg some crisis Which further analysis should you do to address this concern? Please briefly describe your plan for using this approach. Which shortcomings should you mention as warning messages for using this new analysis in decision-making?
Related Book For
Organizational Behaviour Concepts Controversies Applications
ISBN: 978-0132310314
6th Canadian Edition
Authors: Nancy Langton, Stephen P. Robbins, Timothy A. Judge, Katherine Breward
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