Chapter 6 - D Solar example

Decision TreeD-Solar On-Shore or Off-Shore

On-ShoreD-Solar On-Shore or Off-ShoreOn-Shore assumptionsSales Price70Decision tree0.24k0.1Variable cost400.56Fixed cost1,000,0000.060.14Period 2 evaluationDESalesProduction Cost QuantityRevenue (euro)Cost (euro)Profit (euro)14400010.8914400014400010,080,0006,760,0003,320,0001440008.9114400014400010,080,0006,760,0003,320,0009600010.8996000960006,720,0004,840,0001,880,000960008.9196000960006,720,0004,840,0001,880,0001440007.2914400014400010,080,0006,760,0003,320,000960007.2996000960006,720,0004,840,0001,880,0006400010.8964000640004,480,0003,560,000920,000640008.9164000640004,480,0003,560,000920,000640007.2964000640004,480,0003,560,000920,000Period 1 evaluationPeriod 0 evaluation120,000120,00080,00080,000100,000EP3,032,0003,032,0001,688,0001,688,000EP4,872,000PVEP2,756,3642,756,3641,534,5451,534,545PVEP4,429,091Revenue from mfg and sale of 120,000 panels8,400,0008,400,0005,600,0005,600,000Revenue from mfg and sale of 144,000 panels7,000,000Fixed & Var cost5,800,0005,800,0004,200,0004,200,000Fixed & Var cost5,000,000P 5,356,3645,356,3642,934,5452,934,545P 6,429,091

Off-ShoreD-Solar On-Shore or Off-ShoreOn-Shore assumptionsExchange rateSales Price70Decision tree0.24k0.1P09Variable cost3400.56P19.9Fixed cost8,000,0000.06P210.890.14DESalesProduction Cost QuantityRevenue (euro)Cost (euro)Profit (euro)14400010.891300001300009,100,0004,793,3884,306,6121440008.911300001300009,100,0005,858,5863,241,4149600010.89960001000006,720,0003,856,7492,863,251960008.91960001000006,720,0004,713,8052,006,1951440007.291300001300009,100,0007,160,4941,939,506960007.29960001000006,720,0005,761,317958,6836400010.89640001000004,480,0003,856,749623,251640008.91640001000004,480,0004,713,805(233,805)640007.29640001000004,480,0005,761,317(1,281,317)Period 1 evaluationPeriod 0 evaluation120,000120,00080,00080,000100,000EP3,301,4412,118,6501,815,312824,937EP4,305,580PVEP3,001,3101,926,0461,650,284749,943PVEP3,914,164Revenue from mfg and sale of 120,000 panels8,400,0008,400,0005,600,0005,600,000Revenue from mfg and sale of 144,000 panels7,000,000Fixed & Var cost4,929,2936,024,6914,242,4245,185,185Fixed & Var cost4,666,667P 6,472,0174,301,3543,007,8591,164,757P 6,247,497

DecisionD-Solar On-Shore or Off-ShoreExpected profit from onshoringPeriod 0 profits2,000,000Period 1 profits2,360,000Period 2 profits2,763,200expected profit6,429,091Expected profit from offshoringPeriod 0 profits2,333,333Period 1 profits2,506,667Period 2 profits2,674,319expected profit6,822,302