1. Use the solution to Session 5 Q1 as data for this question.

a) How many units do you need to sell in the first year to break even in the first year?

b) How many units do you need to sell in the first year to break even in the second year?

c) Construct three scenarios:

Most Likely: First Year Unit Sales = 1600, First Year Unit Price = $1800
Worst Case : First Year Unit Sales = 1300, First Year Unit Price = $1700
Best Case : First Year Unit Sales = 1700, First Year Unit Price = $1850

d) Display the Worst Case scenario. How will the NPV change if (other parameters
remaining same) the Yearly Sales Growth rate were to be below 100%? Vary the Yearly
Sales Growth rate between 50% and 100% at 5 percentage point intervals and calculate
the NPVs corresponding to each Yearly Sales Growth rate for each of the three scenarios.