Question

Otobai Company in Osaka, Japan is considering the introduction of an electrically powered motor scooter for city use. The scooter project
requires an initial investment of ¥19 billion. The cost of capital is 12%. The initial investment can be depreciated on a straight-line basis over
the 10-year life of the project. Profits are taxed at a rate of 50%.

Consider the following project estimates:
Market size 1.4 million
Market share .1
Unit price ¥ 395,000
Unit variable cost ¥ 320,000
Fixed cost ¥ 3.4 billion
Otobai is considering still another production method for its electric scooter. It would require an additional investment of ¥19 billion but would
reduce variable costs by ¥44,000 per unit.
a. What is the NPV of this alternative scheme?

please include excel explanation video or at least detailed excel sheet that explained from where did you get the numbers.

Answer 1