Question: please help!! III. This is for questions 26 -33 Perform a scenario analysis creating a best case and a worst case in addition to the



III. This is for questions 26 -33 Perform a scenario analysis creating a best case and a worst case in addition to the base case. The managers give you the following information. The chief marketing officer (CMO) estimates that they will sell 3,000 units a year for 5 years at a price of $139 each. If people really like the concept of brewing their own frappuccinos and lattes she estimates that they will sell 4,000 units a year and can charge $150 per unit. She estimates that there is a 25% chance of this. If people do not want the bother of brewing their own and do not worry about going inside the Starbucks, then she estimates they will only sell 2,000 units and can only sell them for $125 each. She estimates there is a 20% chance of this happening. The chief operations officer (COO) estimates that the variable costs to build these will be 72% of revenue. If they can get the higher volumes, then he estimates the cost to be only 70%. But with the really low volumes the cost will be 75%. The chief financial officer (CFO) says the company will use the MACRS 3 year class for depreciation. He estimates that the assembly line will have salvage value of $12,000. However, he notes that worst case there may be nothing to salvage and best case they could find a buyer willing to pay $20,000. He notes that Starbuck's tax rate is 26.2% and that the normal WACC is 7.7%. He says that the WACC could be as high as 8.2% (worst case) and as low as 7.4% (best case). QUESTION 26 Use the data and instructions from part 3 of the Starbuck's project data. What is the NPV in the BEST case scenario? A. $162,215.82 OB. B. $201,378.18 OC. $413,205.33 OD. $1,786,226.88 QUESTION 27 Use the data and instructions from part 3 of the Starbuck's project data. What is the NPV in the WORST case scenario? A. -$89,424.69 B. $137,678.36 C.. --$166,750.24 D. -$332,637.06 QUESTION 28 Use the data and instructions from part 3 of the Starbuck's project data. What is the Expected NPV for this project? A $3,703.80 B. $19,337.77 C. $24,875.35 D. $30,164.65 QUESTION 29 Use the data and instructions from part 3 of the Starbuck's project data. What is the standard deviation of the NPVs of this project? A. $73,659.10 B. $93,485.38 C. $123,836.41 OD. $155,085.56 QUESTION 30 Use the data and instructions from part 3 of the Starbuck's project data What is the coefficient of variation of the NPVs of this project? A 2.77 B.5.98 OC-6.40 D.8.58 QUESTION 31 If Starbuck's averages a CoV of 7.8 on their projects, that means that this current project has more risk than normal. True False QUESTION 32 By doing this project, Starbucks may take away revenue from Starbuck's brick and mortar stores. Should this decrease in revenue be included in the business case? NO- the business case should stand on its own NO- this is a sunk cost YES- this is a negative externality YES- this is a positive externality Click Save and Submit to save and submit. Click Save All Answers to save all answers III. This is for questions 26 -33 Perform a scenario analysis creating a best case and a worst case in addition to the base case. The managers give you the following information. The chief marketing officer (CMO) estimates that they will sell 3,000 units a year for 5 years at a price of $139 each. If people really like the concept of brewing their own frappuccinos and lattes she estimates that they will sell 4,000 units a year and can charge $150 per unit. She estimates that there is a 25% chance of this. If people do not want the bother of brewing their own and do not worry about going inside the Starbucks, then she estimates they will only sell 2,000 units and can only sell them for $125 each. She estimates there is a 20% chance of this happening. The chief operations officer (COO) estimates that the variable costs to build these will be 72% of revenue. If they can get the higher volumes, then he estimates the cost to be only 70%. But with the really low volumes the cost will be 75%. The chief financial officer (CFO) says the company will use the MACRS 3 year class for depreciation. He estimates that the assembly line will have salvage value of $12,000. However, he notes that worst case there may be nothing to salvage and best case they could find a buyer willing to pay $20,000. He notes that Starbuck's tax rate is 26.2% and that the normal WACC is 7.7%. He says that the WACC could be as high as 8.2% (worst case) and as low as 7.4% (best case). QUESTION 26 Use the data and instructions from part 3 of the Starbuck's project data. What is the NPV in the BEST case scenario? A. $162,215.82 OB. B. $201,378.18 OC. $413,205.33 OD. $1,786,226.88 QUESTION 27 Use the data and instructions from part 3 of the Starbuck's project data. What is the NPV in the WORST case scenario? A. -$89,424.69 B. $137,678.36 C.. --$166,750.24 D. -$332,637.06 QUESTION 28 Use the data and instructions from part 3 of the Starbuck's project data. What is the Expected NPV for this project? A $3,703.80 B. $19,337.77 C. $24,875.35 D. $30,164.65 QUESTION 29 Use the data and instructions from part 3 of the Starbuck's project data. What is the standard deviation of the NPVs of this project? A. $73,659.10 B. $93,485.38 C. $123,836.41 OD. $155,085.56 QUESTION 30 Use the data and instructions from part 3 of the Starbuck's project data What is the coefficient of variation of the NPVs of this project? A 2.77 B.5.98 OC-6.40 D.8.58 QUESTION 31 If Starbuck's averages a CoV of 7.8 on their projects, that means that this current project has more risk than normal. True False QUESTION 32 By doing this project, Starbucks may take away revenue from Starbuck's brick and mortar stores. Should this decrease in revenue be included in the business case? NO- the business case should stand on its own NO- this is a sunk cost YES- this is a negative externality YES- this is a positive externality Click Save and Submit to save and submit. Click Save All Answers to save all answers
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