Exhibit 1 Sales forecasts: The forecasts are based on projected levels of demand. The firm could face weak, average, and strong demand. All the numbers are expressed in today's dollars. The forecasted average inflation per year is 3.0%. Demand level Weak Average Strong Probability 25% 45% 30% Price per electric motor $9,100 $9,200 $9,250 Units sold per year 40,000 40,500 40,750 Labor cost per electric motor $4,250 Parts $2,500 Selling General $9,500,000 Administrative Average warranty cost per year per electric motor for the first five years is $75. The present value of this cost will be used as a cost figure for each electric motor. Afterwards, the electric motor owners will become responsible the repairs. The electric motors can be produced for eight years. Afterwards, the designs become obsolete. Exhibit 2 Controller costs: Controller choices: Controller model number CTX - 13 MT - 78 Price per controller and installation $1,280 $1,260 Average annual warranty cost per year | $90 $100 for five years. Afterwards, the electric motor owner will become responsible the repairs*. The chosen controller will be installed in every electric motor and will become a cost figure for each unit produced. * The controller manufacturers are not providing Electrics with any warranty. However, Electrics will provide warranty to its customers. After the initial five years, the electric motor owners may purchase extended warranty from any insurance company that offers such packages