ANL203: Analytics for Decision-Making Assignment, SUSS, Singapore You are to analyze a spreadsheet model in Capacity.xlsx which is used by Company A to plan the proper capacity level for a new product

Question 1

You are to analyze a spreadsheet model in Capacity.xlsx which is used by Company A to plan the proper capacity level for a new product. The company aims to maximize the expected net present value generated from the new product over the next 15 years. The discount rate is assumed as 10% per year. The unit cost of building capacity (400,000 units) to produce the new product is $10 per year. The unit maintenance cost is $1 per year.

Assuming all construction costs are paid at year 0, the first profits come in at the end of the first year. In year 1, we know demand will be for 160,000 units of the product. The annual percentage growth of demand for the product is 15%. During year 1, each unit of the product sells for $8. The price of the product will grow by 5% per year. Unit variable cost is known to be 40% of the sales price. The depredation rate is 10% and the tax rate is 30%.

(a) Your task in this question is to analyze the spreadsheet model built for you and identify all the bugs You may assume that the accounting in the model is conceptually correct. Present your findings in tabular format.