FUTURE CARS INC. PRODUCT

STRATERGY DECISION

PREVIEW

Future Cars Inc. is a high-tech, alternative-energy automobile company based in the Northeast Untied states.

The company has already designed and built an ultra-low emission vehicle (ULEV) that is selling well, but Future Cars must make a major decision about what kind of car to build and market in the future.

The basic car designs under consideration are:

1. Electric-gas hybrid vehicle2. Hydrogen fuel cell-powered vehicle that does

not use gasoline.

This strategic decision has eight possible outcomes:

1. Hybrid electric technology (E)a. Recession and low gasoline price (R/L/E)b. Recession and high gasoline price (R/H/E)c. Boom and low gasoline price (B/L/E)d. Boom and high gasoline price (B/H/E)2. Fuel-cell technology (F)a. Recession and low gasoline price (R/L/F)b. Recession and high gasoline price (R/H/F)c. Boom and low gasoline price (B/L/F)d. Boom and high gasoline price (B/H/F)

INCOME & CASHFLOW STATEMENT

24%

37%

40%

Net Income after Taxes ( Cash Inflow)

$326,250,000.00 $505,755,960.00 $553,438,178.87

33%

9%

22%

36%

End of year Cash on Hand (Available to invest)

$1,300,000,000.00

$373,750,000.00

$879,505,960.00

$1,432,944,138.87

INTERNAL RATE OF RETURN

SUMMARY OF KEY RESULTS

1 2 3 $-

$200,000,000.00

$400,000,000.00

$600,000,000.00

$800,000,000.00

$1,000,000,000.00

$1,200,000,000.00

$1,400,000,000.00

$1,600,000,000.00

Net Income After Taxes NAEnd-of-year cash on hand NA

Years

(U

S D

OLL

ARS)

SCENARIO SUMMARY

CONCLUSION

So, when there is a Boom and high gasoline price and Fuel-cell technology production then there will be internal rate of return of 85%.

When there is a Boom and high gasoline price and Hybrid electric technology production then there will be internal rate of return of 85%.