Smiling Firm- Investment Under Uncertainty

Abstract

The case study is a discussion of planning and preparation involved in setting up of a micro unit for producing soya milk and soya paneer by a young entrepreneur. As the product is new and evolving, there is high uncertainty about sales of the product. Investment through loan at subsidised rate under government scheme is a viable option.However, the entrepreneur and the bank want to financially evaluate the project before committing themselves to the funds. This case is an attempt to estimate the cash flows and net present value of the project.