EGR 403-Project #2“The Man”The 2 ScenariosScenario 2Analysis CriteriaRaytheonSolar Manufacturing CompanyPresent Worth ComparisonSlide 9Sensitivity AnalysisSlide 11ConclusionReferencesEGR 403-Project #2David GadeaMisha NoviniDavid RoseGroup 1Dr. RosenkrantzMarch 8, 2005“The Man”29 Years of AgeSouthern California ResidentSingle; no children$500,000 currently investedEducationB.S. in Manufacturing EngineeringM.S. in BusinessExperience4 years of field experience2 years field supervisorThe 2 ScenariosWorking for RaytheonBenefitsSet SalarySet HoursHealth InsuranceCar, Gas, Travel, & Cell Phone AllowanceRetirement PlanBonusStarting His Own Solar Manufacturing CompanyBenefitsMoneyNo set ScheduleNo BossScenario 2Starting His Own Solar Manufacturing CompanyBenefitsMoneyNo set ScheduleNo BossAnalysis CriteriaYearly Income2.5% Inflation RateNet Present Worth2, 5, 10, 15, 20, 25, 30, 36 YearsRaytheonContinuing Salary of $120,000 with 4.5% increase each yearWork for 36 years$840 per year in Health InsuranceCompany contributes 50% of what he contributes to his 401K plan2% Bonus per YearPension Plan$195, 484 per year after retirementSolar Manufacturing CompanyQuantity sold = maximum possible production (15MW)$4.00 / Watt income drops 0.1% per year$3.70 / Watt Total Cost (includes fixed & variable costs) drops 0.1% per year13 Million every 10 years in machinery with no salvage value (adjusted for inflation)Borrow 15 Million from Venture Capitalist @ 210% return in 7 yearsPresent Worth ComparisonYears Raytheon Self Employed1 $132,440.00 $3,500,000.002 $266,707.32 $4,404,682.935 $823,141.29 $5,435,158.3510 $1,566,481.97 $980,889.7415 $2,369,826.09 $17,873,005.7020 $3,241,049.65 $19,029,217.5925 $4,188,619.81 $33,096,545.8430 $5,221,679.01 $30,482,047.8536 $6,588,204.94 $44,801,793.07Present Worth Comparison05,000,00010,000,00015,000,00020,000,00025,000,00030,000,00035,000,00040,000,00045,000,0001 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38YearsPresent WorthRaytheonSelf-EmployedSensitivity AnalysisSelling price drops 0.5% per yearQuantity sold doesn’t reach maximum capacityThe production cost per watt remains unchangedSensitivity Analysis-$50,000,000-$40,000,000-$30,000,000-$20,000,000-$10,000,000$0$10,000,000$20,000,000$30,000,000$40,000,000$50,000,0001 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37YearsPresent WorthOriginalSelling PriceLow QuantityCost / WattRaytheonConclusionRaytheon offers job security and a steady incomeSelf-employment requires a lot of time, especially the first year.Self-employment risks big lossesSelf-employment can also produce huge returnsReferencesGT Solar Technologieswww.nrel.gov/pvmatwww.aarp.orgNewnan, et al. Essentials of Engineering Economic Analysis. Oxford University Press. New York, 2002.Dr.
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