A carmaker company is thinking about introducing a new sport car.
The firm already produces different types of cars including luxury cars.
It is a 10 -year project.
It would require a $200 million investment.
a/ The firm estimates that they will be able to sell each year 20,000 cars at $40,000 each.
However, 25% of the customers will come from existing customers of the firm and who buy luxury cars.
We assume that the price of the luxury car is $35,000.
What will be the incremental revenues of the project?
b/ Let's suppose that the project will bring additional sales of $90 million each year from posters, gadgets, and other
secondary items. What is the new incremental revenue?
c/ The cost of goods sold will be $600 million the first year and increase by 1% every year.
In addition, the firm considers to launching an advertising campaign. It will cost $10 million the first year, $6
million the second year, and $3 million the following two years, then no thing after.
What are the incremental EBITDAs?
Show on a spreadsheet all the relevant items like in an income statement until EBITDA for year 0 and each of the
following 10 years.
d/ Let's suppose that you depreciate linearly the $200 million in plant and equipment linearly over the 10 years.
Also, there is no debt, and the tax is 35%.
What are the incremental net incomes?
Again, show on a spreadsheet all the relevant items like in an income statement until net income for year 0 and each
of the following 10 years. (Of course, take the spreadsheet from (c)/(a)nd continue until net income)
A carmaker company is thinking about introducing a new sport car. The firm already produces different types of cars including luxury cars. It is a 10-year project. It would require a $200 million investment.
a/ The firm estimates that they will be able to sell each year 20,000 cars at $40,000 each However, 25% of the customers will come from existing customers of the firm and who buy luxury cars We assume that the price of the luxury car is $35,000 What will be the incremental revenues of the project?
b/ Let's suppose that the project will bring additional sales of $90 million each year from posters, gadgets, and other secondary items. What is the new incremental revenue?
c/ The cost of goods sold will be $600 million the first year and increase by 1 % every year. In addition, the firm considers to launching an advertising campaign. It will cost $10 million the first year, $6 million the second year, and $3 million the following two years, then no thing after. What are the incremental EBITDAs? Show on a spreadsheet all the relevant items like in an income statement until EBITDA for year 0 and each of the following 10 years.
d/ Let's suppose that you depreciate linearly the $200 million in plant and equipment linearly over the 10 years. Also,there is no debt,and the tax is 35%. What are the incremental net incomes? Again, show on a spreadsheet all the relevant items like in an income statement until net income for year 0 and each of the following 10 years. (Of course, take the spreadsheet from c/ and continue until net income)
