Scenarios from Moon Schwartz (2000) Simulation Model
Page last updated 24/06/2003
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All the subsequent scenarios have been generated with the following parameters:
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Bankruptcy in year 5
Under this scenario revenues are growing, loss is reduced each year yet the company runs out of cash in year 5 (as indicated by the bankruptcy line)
No Bankruptcy, present value of firm is $ 5.8 billion
Under this scenario the firm turns profitable in year 3 and generates enough cash in these critical first few years.
Illustration of revenue growth process
The charts below illustrate the dynamics of the revenue process. Both depict the same series (rate of growth of revenues) but the second one only plots the future, simulated revenue growth. In the long-run, the growth rate approaches more sustainable values which in this simulation is assumed at 1.5% per year.
Kurt Hess, kurthess@waikato.ac.nz
Copyright © 2003 Waikato Management School. All rights reserved.
Revised: June 24, 2003
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