Marketing

The following are estimates using the NPV calculator:

Expected Commercial Value (NPV)

$11,099,275

Probability of Commercial Success

Probability of Technical Success

Discount Rate

Cashflows

FY13

FY

Development Costs

$2,000,000

$1,000,000

Launch and Marketing Costs

$1,200,000

Forecasted Units Sold

$5,200

Forecasted Revenue (Unit Sales Price x Units Sold )

$2,080,000

Discounted Cashflows (10-Year)

Calculated

NPV Income

$22,200,816

NPV Development Costs

$3,720,341

NPV Launch and Marketing Costs

$2,941,037

FY15

FY16

FY17

FY18

FY19

$400,000

$200,000

$200,000

$200,000

$100,000

$800,000

$300,000

$300,000

$300,000

$150,000

$9,000

$11,000

$10,000

$8,600

$7,400

$3,600,000

$4,400,000

$4,000,000

$3,440,000

$2,960,000

FY20

FY21

FY22

FY23

$100,000

$50,000

$150,000

$100,000

$100,000

$100,000

$6,600

$5,800

$5,200

$4,800

$2,640,000

$2,320,000

$2,080,000

$1,920,000

1b.

The probability commercial success was an assumed input, a constant. It was 0.8. This figure went into the Expected Commercial Value calculation, which was the NPV multiplied by the probability of technical success and the probability of commercial success....
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