Mr. Livingston noticed that there is an abundance of enthusiasm about entering the electric car conversion...

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Mr. Livingston noticed that there is an abundance of enthusiasm about entering the electric car conversion kit building business, but his cautious nature made him seek a more neutral analyst. This is your responsibility. You have been hired by Electrics to analyze the proposal to build the electric motor and provide recommendations to Mr. Livingston. The issues that need to be addressed in your report include the following (these are not in any particular order, for presentation purposes. You are to decide how and where they should be addressed in the written report.): How much importance should be given to the energy cost situation? • What is the project's cost of equity? What is the appropriate discount factor to use for evaluating the electric motor project? • Forecast the project's cash flows for the next eight years. What assumptions did you use? Use MACRS depreciation for this case. Use the appropriate capital budgeting techniques to evaluate the project. • Use the average demand scenario to evaluate the sensitivity of the project's NPV with respect to sale price of the electric motor and the cost of the controller. Based on the scenario and sensitivity analysis you performed above, comment on the overall riskiness of the project. • Which of the two controllers should be used in the conversion kit if you decide to go ahead with the project and why? . . . . Mr. Livingston noticed that there is an abundance of enthusiasm about entering the electric car conversion kit building business, but his cautious nature made him seek a more neutral analyst. This is your responsibility. You have been hired by Electrics to analyze the proposal to build the electric motor and provide recommendations to Mr. Livingston. The issues that need to be addressed in your report include the following (these are not in any particular order, for presentation purposes. You are to decide how and where they should be addressed in the written report.): How much importance should be given to the energy cost situation? • What is the project's cost of equity? What is the appropriate discount factor to use for evaluating the electric motor project? • Forecast the project's cash flows for the next eight years. What assumptions did you use? Use MACRS depreciation for this case. Use the appropriate capital budgeting techniques to evaluate the project. • Use the average demand scenario to evaluate the sensitivity of the project's NPV with respect to sale price of the electric motor and the cost of the controller. Based on the scenario and sensitivity analysis you performed above, comment on the overall riskiness of the project. • Which of the two controllers should be used in the conversion kit if you decide to go ahead with the project and why? . . . .

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Report on Analysis of Electric Car Conversion Kit Building Business Introduction This report analyzes the proposal to build an electric motor conversion kit for cars The objective is to evaluate the p... View the full answer