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16. Risk Analysis

The Investment Appraisal above is carried out assuming that every sales target, unit prices and cost reduction scenarios are able to be reached, so to produce the expected target of NPV, IRR, Payback and Breakeven (B/E).

However, the targets may not be achieved due to the risk that sales, price and cost do not happen due to: i) efforts made by competitors through better products or cheaper prices or better marketing and promotion; ii) lack of efficient marketing and promotion; 3) economic recession which depresses purchasing power; iv) initial price too high, which deters potential buyers; v) wrongly targeted market segment caused by a wrong segment being addressed which do not generate any sales; and vi) a resistance of suppliers to lower

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