Q2 (5 points): Create an NPV table.

(1) The current table only include Year 1-3. Please create Year 4. Model Inputs Sales Volume Growth, machines Model Values 15% per year Initial Sales Volume, machines Initial Retail Price, machines 200000 unitslyear $260 per unit Distributor Retail Margin 40% Retail Price Growth, machines -10% per year Product Development Equipment and Tooling Production Ramp-up Market Launch 5.0 $M over 1 year 4.0 $M over 1/2 year 2.0 SM over 1/2 year 10.0 $M over 1/2 year Marketing and Support Production Cost, machines Production Overhead 5.0 $M/year $55 per unit 1.0 $M/year 7%/ year Interest rate: Quarterly sales profile: 20% 25% 25% 30% Year1 Year3 Year2 Value in $M Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 46k 57.5k 57.5k 69k Q1 Q2 Q3 Q4 Unit/quarter $/ unit Total revenue 40k 50k 50k 60k 156 156 156 156 140 140 140 140 6.24 7.80 7.80 9.36| 6.46 8.07 8.07 9.69 Product development 1.251.251.25 1.25 Equipment & tooling Product ramp- 2.00 2.00 1.00 1.00 up Marketing & 6.25 6.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 support Production 2.2 2.75 2.75 3.30 2.53 3.163.16 3.80 Production 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 overhead 1.25 1.25 3.25 10.59.70 4.25 4.25 4.80 4.03 4.66 4.66 5.30 Total Cost Period cash |-1.25 -1.25-3.25 -10.5-3.46 3.55 3.55 4.56 2.43 3.41 3.41 4.39 flow NPV of this |-1.23 -1.21 -3.09-9.80 -3.17 3.20 3.14 3.97 2.08 2.87 2.82 3.57 period (2) Scenario study Please check the uncertainty table below. The company needs to make a decision between two options: A Reduce the initial sales volume to 100000, but also reduce the costs on market launch (8.0) B- Reduce the cost of product development (4.0), but increase the cost of marketing and support (6.0) Which one is better (according to the results at the end of Year 4)