Use the Data Shown Below to Answer the Following Question(s)

question 3

Multiple Choice

Use the data shown below to answer the following question(s) .
Captain Jack Automobiles launched a new car and tabulated the below data for the new launch. The project manager identified the following distributions and parameters for these variables:
Market size: normal with a mean of 2,000,000 units and a standard deviation of 400,000 units
R&D costs: uniform between $639,000,000 and $781,000,000
Test Drives: lognormal with mean of $160,000,000 and standard deviation $16,000,000
Annual market growth factor: triangular with minimum = 2%,maximum = 6%,and most likely = 3%
Annual market share growth rate: triangular with minimum = 15%,maximum = 25%,and most likely = 20%
Use 5,000 trails to generate the simulation model for NPV using Crystal Ball.
-Using the Tornado Chart tool,determine the assumption that has the least impact on the cumulative net profit for year 1.

• A)Market size
• B)R&D
• C)Test Drives
• D)Time of cash flow

---

Definitions:

Risk Of Default

The possibility or likelihood that a borrower will not be able to meet debt obligations, leading to financial losses for the lender.

Futures Contracts

Financial contracts obligating the buyer to purchase an asset (like a commodity or financial instrument) and the seller to sell the asset at a predetermined future date and price.

Forward Contracts

Financial derivatives that obligate the buyer to purchase and the seller to sell a specific asset at a predetermined future date and price.

Marked-To-Market

Marked-to-market refers to the practice of valuing assets or financial instruments based on their current market prices.