Question: Please guide me and help me do this analysis. I don't know how to calculate Expenses and VC warranty from year 1 to year 5.
Please guide me and help me do this analysis. I don't know how to calculate Expenses and VC warranty from year 1 to year 5.
| Detroit Engine | Average |
| Inputs | Base Case |
| Equipment Cost | $ 1,000,000,000 |
| Training Costs (Year 1 & Year 2) | $ 200,000,000 |
| Salvage Value, Year 20 | $ 10,000,000 |
| Depreciation Per Year | $ 50,000,000 |
| Units Sold Every Year | 11,000 |
| Sales price per unit, Year 1 | $ 220,000 |
| Annual change in sales price, after Year 1 | 6.50% |
| Variable cost per unit (VC), Year 1 | $ 170,000 |
| Labor Cost | $ 50,000 |
| Components & Parts Per Bus | $ 95,000 |
| Engine | $ 25,000 |
| Warranty (Present Value) | $ 5,997 |
| Annual change in VC, after Year 1 | 6.50% |
| Fixed Cost (FC), Year 1 | $ 250,000,000 |
| Annual change in FC, after Year 1 | 6.50% |
| Project WACC | 7.95% |
| Tax Rate | 30.00% |
| Working Capital as % of next year's sales | 10.00% |
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
