Take Five Systems, a new start-up, is developing a new iPhone application (“app”) and provides you with the following assumptions: a. Development and testing of the new app will take four months. Month five is the first month of revenue generation. b. Initial monthly app sales of 5,000 downloads at a price of $2.99 c. Unit sales will grow at 15% per month for months six through twelve and then will be flat thereafter d. The app will become obsolete and will need to be revised/replaced after month 18 Use the data provided to forecast Take Five’s monthly revenue for Months 1-18
2 Take Five Systems is concerned about the accuracy of their revenue estimates in Question 2. Specifically, they wish to use sensitivity analysis to evaluate the impact on Month 18 revenue of the following: a. Variations in 2% increments between 9-21% in the growth rate of unit sales in Months 5-12 (that is, 9%, 11%,…, 19%, 21%) b. Variation in 500 unit increments between 2,500 and 7,500 in the level of initial sales (that is, 2,500, 3,000,…, 7,000, 7,500)