TED AND ALICE'S HOUSE DECISION

Constants 2011 2012

Non-Housing Living Expenses (Cars, Food, Medical etc.) NA
Mortgage Amount for Home Purchase NA
Real Estate Taxes and Insurance on Home NA
Utilities Expenses (Heat & Electric) - Apartment NA
Utilities Expenses (Heat, Electric, Water, Trash) - House NA
House Repair and Maintenance Expenses NA

Inputs
Rental Occupancy (H=High, L=Low) NA
First Time Buyer Bond Loans Available (Y=Yes, N=No) NA

Summary of Key Results

End-of-Year Cash on Hand (Rent) NA
End-of-Year Cash on Hand (Buy) NA

Calculations
Apartment Rent
House Payments NA
Interest Rate for House Mortgage NA

Income and Cash Flow Statement (Continue to Rent)

Beginning-of-year Cash on Hand NA
Ted's Take Home Wages
Alice's Take Home Salary
Total Take Home Income
Apartment Rent NA
Utilities (Apartment) NA
Non-Housing Living Expenses NA
Total Expenses NA
End-of-Year Cash on hand $ 4,000

Income and Cash Flow Statement (Purchase House)

Beginning-of-year Cash on Hand NA
Ted's Take Home Wages
Alice's Take Home Salary
Total Take Home Income
House Payments NA
Real Estate Taxes and Insurance NA
Utilities (House) NA
House Repair and Maintenance Expense NA
Non-Housing Living Expenses NA
Total Expenses NA
End-of-Year Cash on hand $ 4,000
 2013

NA

NA
NA

NA
FUTURE CARS INCORPORATED: FUTURE STRATEGY DECISION

Constants 2012
Direct labor Costs / Hr NA
Direct material Costs per Electric Hybrid Car (3% Inflation) NA
Direct material Costs per Fuel Cell Car (3% Inflation) NA
Direct Labor Hours per Electic Hybrid Card (5% learning Curve) NA
Direct Labor Hours per Fuel Cell Car (5% Learning Curve) NA
Overhead Allocation Rate per Direct Labor Hour (Both technologies) NA
Capital Investment for Electric Hybrid Car $ 600,000,000
Capital Investment for Fuel Cell Car $ 1,100,000,000
Median Alternative Energy Car Sales Price, 2012 $ 35,000
Corporate Income Tax Rate 25%

Inputs
Economic Outlook (R = Recession, B=Boom) NA
Gasoline Price Outlook (L=Low, H=High) NA
Technology Selection (E=Electric Hybrid, F=Fuel Cell) NA

Summary of Key Results

Net Income After Tax NA
End-of-Year Cash on Hand NA
Internal Rate of Return for Investment NA

Calculations
New Product Capital Investment (Internally Financed)
Total Forecasted US Marked Demand for Alternative Energy Cars ₹ 2,000,000
Forecasted Sales for Future Cars (Units) NA
Total Direct Materials NA
Total Direct Labor NA
Total Manufacturing Overhead NA
Cost of Goods Sold NA
Manufacturing Cost per Unit NA
Unit Sales Price
Period Costs (Sales, Marketing, Distribution, Customer Service) $ 1,500,000,000

Income and Cash Flow Statement

Beginning-of-year Cash on Hand (deduct investment for 2013) NA
Total Sales Revenue NA
Less Cost of Goods Sold NA
Gross Profit NA
Less Period Costs NA
Net Profit before Income Tax NA
less: Income Tax Expense NA
Net Income After Taxes (Cash Inflow) NA
 End-of-year Cash on Hand (Available to Invest) $ 1,300,000,000

Internal Rate of Return Calculation

Investment (Cash Outflow) NA
Cash Inflow (2013) NA
Cash Inflow (2014) NA
Cash Inflow (2015) NA
Internal Rate of Return (IRR) NA
 2013 2014 2015
$ 30 $ 32 $ 33
$ 11,000
$ 14,000
160
130
$ 60
NA NA NA
NA NA NA
NA NA NA
25% 25% 25%

NA NA
NA NA
NA NA

NA NA

NA NA NA
NA NA
NA NA
NA NA
NA NA
NA NA
Given Data

Economic Outlook Gasoline Price Market Demand

R L 95% of Previous year
R H 98% of Previous year
B L 100% of Previous year
B H 102% of Previous year

Economic Outook Period Costs (Non-Manufacturing Costs)

R 3% Increase
B 6% Increase

Technology Selection Forecasted Sales

Hybrid Electric 9% of total US Market
Fuel Cell 12% of total US Market

3% inflation in direct labour costs indicates an increase in these costs for each of 2013, 2014 and 2015 by
3%.

5% learning curve in direct labour hours indicates a decrease in these hours for each of 2013, 2014 and
2015 by 5%, as efficiency increases with experience.
Sales Price
No Increase
2% Increase
4% Increase
6% Increase