Figure 17.4 NPV Model Sensitivity to Capex, Opex, and Netex
Annual price reduction
25%
Elasticity
2.25
25%
Discount rate
$200
Initial Price
8,500,000
Initial Demand
Capital Expenses
$190
Initial Capex per incremental unit
Initial infrastructure cost
$10,000,000,000
(c) Copyright Level 3 Communications, Inc. 2001. All rights reserved.
year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Price $200.00 $150.00 $112.50 $84.38 $63.28 $47.46 $35.60 $26.70 $20.02 $15.02
Cumulative Units 8,500,000 16,237,946 31,020,103 59,259,147 113,205,507 216,261,750 413,134,887 789,230,803 1,507,704,339 2,880,237,775
Incremental Units 8,500,000 7,737,946 14,782,158 28,239,044 53,946,360 103,056,242 196,873,137 376,095,917 718,473,535 1,372,533,437
Revenue 1,700,000,000$ 2,435,691,845$ 3,489,761,627$ 4,999,990,552$ 7,163,786,008$ 10,263,985,390$ 14,705,826,774$ 21,069,919,032$ 30,188,135,277$ 43,252,349,956$
Table 17.7 Silicon Economics Model Details