Scenario Analysis:

4. Scenario Analysis: Estimated Cash Flows for the Segway People Mover Base CaseYear 0 Years 1-12BicycleScenarionYear 0Years 1-12Investmenet-5,400Investment-5,400Sales16,000SalesVariable Cost13,000Variable CostFixed cost2,000Fixed costDepreciati on450Depreciay onPreas profit550Pretax ProfitTaxes @ 40%220Taxes @ 40%Profit after tax330Profit after taxOperation cash flow780Operating cash flowNet cash flow780Net Cahs Flow$185.37-5,400NPV (OCCof 9%): -5,400Consider the scenario in which a competing form of transportation, the bicycle, causes sales to drop to 90% of expected sales from the base case. a.Fill in the table on the right, including NPV b.What is maximum opportunity cost of capital in both the Base Case and the Bicycle Scenario such that you should undertake the Segway People Mover Project?