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ASSIGNMENT 2: USING THE SPREADSHEET FOR DECISION SUPPORT
purposes of this case, you should keep the large numbers in the spreadsheet. If you see cell results listed as a
group of
#
signs when working with large numbers (see Figure 6-9), the cell is not wide enough to display
the number
simply widen the column until the number is displayed.
FIGURE 6-9
Column C is not wide enough to display the numbers
ASSIGNMENT 2: USING THE SPREADSHEET FOR DECISION SUPPORT
Next, you will use the spreadsheet to gather data needed to determine the best investment decision and to
document your recommendations in a report to Future Cars Inc. management.
As stated before, this DSS model has eight possible financial 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)
s financial position based on each of the preceding possible
outcomes. The Summary of Key Results section lets you see the Net Income after Taxes for each of the first
three years of the new product sales, the End-of-year Cash on hand at the end of each of the three years, and
the Internal Rate of Return. The management team wants to make sure that the selected technology does not
exhaust the company
You are primarily interested in the company
s cash on hand at the end of any year examined (2013 through 2015). In addition, the
team would prefer the technology that provides the best chance of making the targeted Internal Rate of
Return of 20 percent or greater on the investment.
Because there are only eight (2 3 ) possible combinations of inputs for the economic outlook, gasoline
prices, and technology selected, you might want to run the spreadsheet model eight times, changing the
inputs according to the preceding list. You should do this for two reasons:
1. To ensure that no single year from 2013 through 2015 has negative income or end-of-year cash
on hand (in other words, to make sure the company does not run out of money)
2. To print each spreadsheet to meet the requirements of Assignment 2A
You could then transcribe the results to a summary sheet. Next, you know that the management team is
very interested in the financial data from the end of the third year of the model (2015). You can summarize
that data easily using Scenario Manager.
Assignment 2A: Using Scenario Manager to Gather Data
For each of the eight situations listed earlier, you want to know the net income after taxes and the
endof-year cash on hand for the third year (2015) of the project, as well as the internal rate of return generated
by the three years
cash inflows.
 
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