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CAFFE' NERO INVESTMENT DECISION Caff Nero, a famous British coffee, plans to launch a new premium coffee line on the market in 2024. To achieve this objective, the company must undertake new investments in plants and equipment for 2,500,000. These investments must be made at the end of 2023 . Furthermore, at the beginning of the year 2026 the company has to purchase a logistic facility in order to improve the efficiency of the new resources. This further investment in the new logistics structure will cost 1,200,000. To carry out such a project, it is also necessary to use an industrial building, already owned by Caff Nero, which had previously been rented to another company, for 180,000 per year. Following these investments, the Caff Nero marketing manager provides the following sales figures expected for the next few years: The price per kg at which the new product will be sold is 17. COGS can be approximated with respect to the quantity of production material (eg raw material) for a value of 11/kg. Revenues and COGS must be indexed at an inflation rate of 2%, starting from 2024 (inclusive). Investments are depreciated using the linear method. This project is expected to end in 2028, due to the need for a renewal of all product lines at that time. In early 2029, the new plant and equipment will be replaced and sold for 200,000. The company does not plan to divest the logistics structure. The sales manager is willing to apply a new payment policy to facilitate the sale of the new product. The new policy will certainly have an impact on the dynamics of the Company's net working capital which, according to the Chief Financial Officer, will be as follows: The cost of capital for Caff Nero is 9%. The corporate tax rate is 30%. II Part Design a Qualitative and Quantitative Risk Analysis by considering the potential variation on some of the key variables (such as inflation) and the impact on the outcomes. Make free assumptions, motivate them based on critical events, risks, etc, and design a sensitivity analysis, by focusing on table function and scenario manager (remember to design a best and a worst scenarios). After setting those assumptions, apply the new hypothesis on the analysis made and verify the final impact on the NPV, in order to assess under which circumstances it may be convenient or not to implement the project

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