The features I would add to the prototype if I had more time to work on the problem,

#
ranked from most important to least important.

1 A module to understand the market demand function better, and how this affects the
capacity production in-house/out-house. The case states a market of 2Bn/55$ unit
showing a market demand of 36,363,636, while the plant can only produce 30,000,000
units.

2 Sensitivity analysis and breakeven for unit price and how this would affect the overall
project NPV and R&D Multiple.

3 The case states that theproduct life ranges between 4-7 years post the start of
operations, I would want to understand the sensitivity on NPV if I ran it for 4,5,6 and 7
years respectively.
4 A module to better understand cost of inputs

5 A section to better understand market analysis including information on cost of capital,

discount rates among other factors affecting project NPV
SuperChem
Profit Projection/NPV Model

PARAMETERS $
Demand
Historic Price $55.00
Price Premium 17.5%
Discount rate 10%
Market Demand 2,000,000,000

Costs
Production Cost $90
Cost reduction to be achieved 50%
R&D cost $15,000,000
Plant construction cost $250,000,000
Probability of achieving cost reduction 10%
Initial Costs 0$

Capacity
Plant capacity 30,000,000
Initial Production 0

DECISIONS
Go with project? Y

OUTPUTS
Project Expected NPV $1,566,965,874
ROI from R&D Spend (R&D Multiple) $156,696,587
Return Multiple 10.45

CALCULATIONS Starting Year

Year 0
Price $65

Costs
Production Cost 0$
R&D cost $15,000,000
Plant construction cost 0$
Total Costs $15,000,000

Production
Barrels Produced 0

Revenue $0
Profit ($15,000,000)
 Unit Notes

$ per barrel 10 Year Average

% Average of 10-25%
% Assumption for project NPV
barrels Competing product sales

$ per barrel
%
$
$
%
$

barrels
barrels

Y/N

per lb
lbs
#

R&D Project Plant Built Operations Begin - Product

1 2 3 4 5
$65 $65 $65 $65 $65

0$ 0$ 0$ $1,350,000,000 $1,350,000,000
$0 $0 $0 $0 $0
0$ 0$ $250,000,000 0$ 0$
$0 $0 $250,000,000 $1,350,000,000 $1,350,000,000

0 0 0 30,000,000 30,000,000

$0 $0 $0 $1,938,750,000 $1,938,750,000
$0 $0 ($250,000,000) $588,750,000 $588,750,000
Operations Begin - Product Life (4-7 years from launch)
6 7 8 9
$65 $65 $65 $65

$1,350,000,000 $1,350,000,000 $1,350,000,000 $1,350,000,000

$0 $0 $0 $0
0$ 0$ 0$ 0$
$1,350,000,000 $1,350,000,000 $1,350,000,000 $1,350,000,000

30,000,000 30,000,000 30,000,000 30,000,000

$1,938,750,000 $1,938,750,000 $1,938,750,000 $1,938,750,000

$588,750,000 $588,750,000 $588,750,000 $588,750,000
0
0