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You are evaluating the launch of a new product. The total market size is 2,000,000 units in Year 1. The total market is expected to grow 2% each rear thereafter For the new product, you are expected...

You are evaluating the launch of a new product. The total market size is 2,000,000 units in Year 1. The total market is expec

You are evaluating the launch of a new product. The total market size is 2,000,000 units in Year 1. The total market is expected to grow 2% each rear thereafter For the new product, you are expected to have a market share of 6% when the product launches in Year 1, Market share will grow 10% each year thereafter. (Note: this is a 10% growth on the initial 6%, not 10% of the total market). The product will sell for $20.00 the first year, and then increase by $5 each year after. Per unit variable cost is $5.00 the first year with a 5% increase each year. Fixed Costs is$10,000 in the first year with a 3% increase each year. Calculate Revenue, Total Cost of Sales (COGS), and Profit. Calculate NPV over a 4-year period (year 1-4) assuming a 7% discount rate. Would you recommend this new product based on the NPV?
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In this question, the initial cash outlay is not given. Hence, I cannot calculate the NPV. However, I have calculated the present value of the profits generated from the business in the Excel table given below:

Year 1 2 3 4
Total Market Share 2000000 2040000 2080800 2122416
New Product Market Share 120000 132000 145200 159720
Selling Price per product 20 25 30 35
Variable cost per product 5.00 5.25 5.51 5.79
Fixed Cost 10000 10300 10609 10927.27
Revenue 2400000 3300000 4356000 5590200
COGS 610000 703300 811024 935406.6
Profit 1790000 2596700 3544976 4654793
NPV ₹ 1,03,85,831.53

Revenue = Selling Price* Product Market Share

CoGS = Variable Cost*Product Market Share + Fixed Cost

Profit = Revenue - COGS

Formula used to calculate NPV = npv(0.07,Profits from Year 1 to Year 4), where 0.07 is the discount rate.

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