I don't know how to begin to answer these questions.

The TitMar Motor Company is considering the production of a new personal transportation vehicle that would be called the PTV. The PTV would compete directly with the innovative new Segway. The PTV will utilize a three wheel platform capable of carrying one rider for up to 6 hours per battery charge, thanks to a new battery system developed by TitMar. TitMar's PTV will sell for substentially less than the Segway but will offer equivalent features. The pro forma financials for the proposed PTV project, including forecasts and assumptionsthat underline them are set out in Exhibit P3-4.1. Note that revenue is calculated as follows: price per unit * market share (%) * market size, and units sold = revenues / price per unit. The project offers an expected NPV of $9,526,209 and an IRR of 39.82%. Given TitMar's stated hurdle rate of 18%, the project looks like a winner. Even though the project looks like very good based on management's estimates, it is risky and can turn from a positive-NPV investment to a negative one with relatively modest changes in the key value drivers. Develop a spreadsheet model of the project valuation and answer the following questions. a. b. If the firm's market share turns out to be only 5%, what happens to the project's NPV and IRR? If the market share remains at 15% and the price of the PTV falls to $4, 500, what is the resulting NPV? Exhibit P3-4.1 Assumptions and Predictions Price Per unit Market share (%) Market size (Year 1) Growth rate in the market size beginning in Year 2 Unit variable cost Fixed cost Tax rate Cost of capital Investment in NWC Initial investment in PPE Annual Depreciation (5-year life wo salvage) Estimates $4,895 15% 200,000 units 5.00% 4,250 $9,000,000 50% 18% 5% of the predicted change in firm revenue $7,000,000 $1,400,000 Solution Project Analysis Investment Revenue Variable cost Fixed Cost Depreciation EBT (net operating income) Tax Net Operating profit after tax (NOPAT) Plus: Deprecaition expense Less: CAPEX Less: Changes in NWC Free cash flow NPV IRR Cash Flow Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 -7,000,000 146,850,000 154,192,500 161,902,125 169,997,231 178,497,093 -127,500,000 -133,875,000 -140,568,750 -147,597,188 154,977,047 -9,000,000 -9,000,000 -9,000,000 -9,000,000 -9,000,000 -1,400,000 -1,400,000 -1,400,000 -1,400,000 -1,400,000 8,950,000 9,917,500 10,933,375 12,000,044 13,120,046 -4,475,000 -4,958,750 -5,466,688 6,000,022 -6,560,023 -4,475,000 -4,958,750 -5,466,688 6,000,022 -6,560,023 1,400,000 1,400,000 1,400,000 1,400,000 1,400,000 -7,000,000 -7,342,500 -367,125 -385,481 -404,755 -424,993 8,924,855 -14,342,500 5,507,875 5,973,269 6,461,932 6,975,029 16,884,878 $9,526,209 39.82%