# APPENDIX P. GOVERNMENT REGULATORY IMPACT MODEL(GRIM)

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# TABLE OF CONTENTS P.1.1 iNTRODUCTION AND PURPOSE P-i P.1.2 MODEL DESCRIPTION P-i P.1.3 INCOME STATEMENT P-5 P.1.4 MAJOR ASSUMPTIONS P-7 P.2. EXHIBITS P-12

# APPENDIX P: GOVERNMENT REGULATORY IMPACT MODEL (GRIM)

P.1.1 INTRODUCTION AND PURPOSE The purpose of the Government Regulatory Impact Model (GRIM) is to help identify the effects of various efficiency regulations and other regulations on manufacturers. The basic mode of analysis is to determine the change in value of the manufacturer(s) following a regulation or a series of regulations. The model structure also allows an analysis of multiple products with regulations taking effect over a period of time, and of multiple regulations on the same product. Industry value is defined, for the purposes of this analysis as the present value of cash flows for the manufacturer(s) in question. Cash flow is calculated by the user specifying shipment volumes and manufacturer prices (i.e., prices from manufacturers to the first customer, such as a wholesaler) and then selecting user-defined regulatory levels. The model calculates the actual cash flows by yearand then determines the present value of those cash flows both without regulations (the preregulation base case) and with regulations (the post-regulation standards case). Output comes from the model in terms of summary statistics, graphs of maj or variables, and, when appropriate, access to the complete cash flow calculation. P.1.2 MODEL DESCRIPTION The basic structure of the GRIM is a standard annual cash flow analysis that uses price and volume information as an input, builds on fundamental base cost information, and accepts a set of regulatory conditions as changes in costs and investments. The cash flow analysis is separated into two major blocks: income and cash flow. The income calculation determines the profit after taxes but before financial charges. The cash flow calculation converts profit after taxes into an annual cash flow by including investment and non-cash items. Below are definitions of listed items on the printout of the output sheet (see Section P1.3). In addition to the basic structure defined below, several assumptions were added dealing with the synergies that occur between depreciation - time, ordinary R&D - product conversion, and ordinary capital expenditures - capital conversion. These synergies occur as a result of cash flow scenarios incorporating a delay in implementation and a two-tier standard. The supplemental assumptions and scenarios are explained in section P.1.4. (1) Income Statement: Overall calculation ofNet Income Before Financing(17) using revenue and cost items subject to income tax effects as described in (2) through (17).

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# (2) Price/Unit: Actual manufacturer unit price charged to the first level of distribution (distributor, retailer, etc.) Price of Baseline Unit = $285.90' Price of higher efficiency unit = Price of Baseline Unit + (Incremental Mfg. Cost) * (Mfg. Markup) It can also be entered as an input by the user (3) Unit Sales: Annual shipments for the industry is obtained from the National Energy Savings (NES) Spreadsheet. It can also be entered as an input by the user (4) Revenues: Annual revenues; computed by multiplyingPrice/Unit(2) by Unit Sales(3). 

# (5) Base Costs: Costs per unit prior to regulations. (6) New Costs: Costs per unit following regulations. (7) Labor: Factory direct labor and fringe benefit costs; Baseline Labor Cost = $29.3' New Labor Cost = Baseline Labor Cost +

Incremental Labor Cost (8) Material: Purchased materials and components.; Baseline Material Cost = $148.7' New Material Cost = Baseline Material Cost +

Incremental Material Cost (9) Overhead: Factory overhead excluding depreciation. Overhead is treated as both fixed and variable, with the percentage of overhead (excluding depreciation) that is variable set under the Major Assumntions. Baseline Overhead Cost =$33.5 New Overhead Cost = Baseline Overhead Cost +

Incremental Overhead Cost

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# (10) Depreciation: Annual depreciation on pre-regulation assets; computed as apercentageof Revenues (4). Annual depreciation on post

# regulation assets is computed by dividing Conversion Capital Expenditures(25)by a useful life from Major Assumptions. For post-regulation years,Depreciation is the sum of depreciation on pre- and post-regulation assets. Pre-regulation: Depreciation = % of annual revenues Post-regulation: Depreciation = Depreciation_Pre-regulation +

(Conversion Capital Exp./Useful_ life) (11) Cost of Sales: Total cost of sales, computed by addingLabor(7), Material(8), Overhead (9) andDepreciation (10). (12) SG&A: Selling, general and administrative costs are computed as a percentage ofRevenues (4). (13) R&D: Research and development costs unrelated to regulations; computed as a percentage ofRevenues(4). (14) Product Conversion: Expensable costs related to meeting a regulation, often including product redesign costs and expensable factory conversion expenses. Also includes costs incurred for new product literature and catalogs, product obsolescence, and various related marketing expenses. GRIM allocates these costs over a number of years. (15) Profit Before Tax: Profit before taxes and any financing costs; computed by subtractingCost of Sales (11),SG&A (12),R&D(13), and Product Conversion (14) fromRevenues (4). (16) Taxes: Taxes onProfits Before Tax; computed by multiplying the tax rate contained in Major Assumptions byProfit Before Tax (15). (17) Net Income Before Profits after taxes; computed by subtracting Taxes Financing: fromProfit Before Tax(15).

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# (18) Cash Flow Statement: Overall assessment including net income, other cash related items and adjustments and investments. (19) Net In come: Net income; identical toNet Income Before Financing (17). (20) Depreciation: Depreciation is a non-cash cost and is added back intoNet Income (19) as part of the cash flow calculation; identical to Depreciation (10). (21) Change in Working Capital: Additional accounts receivable, inventory, and other cash investments necessary to support increased revenues; computed by multiplying a percentage from Major Assumptions by the change inRevenues (4). (22) Cash Flow from Operations: The cash flow from operating activities; computed by addingNet Income (19),Depreciation (20) and subtracting Change in Working Capital(21). (23) Capital Expenditures: Investment to maintain and replace existing production assets; computed as a percentage of Revenues (4) using apercentage contained in Major Assumptions. Postregulation capital expenditures equal pre-regulation expenditures plus depreciation on Conversion Capital Expenditures (24). Pre-regulation: Capital Exp. = % of annual revenues Post-regulation: Capital Exp. Capital Exp._Pre-regulation +

(Conversion Capital Exp./Useful_ life) (24) Conversion Capital Exp.: Capital costs for meeting regulations, typically including plant, equipment, tooling and the like. These have been provided by AHAM for each efficiency level. (25) Cash Used in Investments: Cash required for assets; computed by addingCapital Expenditures (23) andConversion Capital Expenditures (24).

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# (26) Net Cash Flow: Annual cash flow from operations and investments; computed by subtractingCash Used in Investments (25) fromCash Flow from Operations (22). 

# (27) Post-Regulation Value: Value of the relevant industry following adoption and implementation of the regulatory scenario; the present value of the annualNet Cash Flow (26) from the base year to the year 2030, plus a terminal value based on the final year's cash flow valued as an annuity, are computed by model and listed. The discounted rate for the present value is the "Discount Rate for NPV" contained in Major Assumptions. Pre-regulation value is computed in a similar way using base caseNet Cash Flows(26)and terminal value. P.1.3 INCOME STATEMENT The Income Statement and Cash Flow are shown in Figure P1.1. Two items are not shown below because the full cash flow has been cropped. These include how many years the cash flow is discounted and the terminal value. The cash flow is discounted through 2030. The terminal value is the final cash flow amount divided by the interest rate. The terminal value does not consider growth.

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# P.1.4 MAJOR ASSUMPTIONS

The GRIM is linked directly to the current version of the NES shipments model. The GRJM assumptions page (Figure P.1.2) contains all the NES assumptions required to generate shipment scenarios for GRIM. The user defines and initiates a new GRIM analysis in a simple 6 step process. Step 1 consists primarily of defining the timing and level of single-tier or two-tier standards. Step 2 defines the elasticity values used to generate shipments. Step 3 defines the financial parameters for the GRIM analysis including a description of plant and property used to calculate stranded assets. Step 4 defines additional scenario parameters: the market share under investigation (100% for the whole industry, 20%, 4.4% and 2.2% for "typical" manufacturers; the default mark-up assumptions (high and low); the presence of a delay in implementation; the assumption used to calculate stranded assets (shipments or revenue based); and consolidation or no consolidation scenarios. Step5contains the major assumptions for the repair industry analysis. Finally step 6 initiates the analysis calculations. Three types of analyses are possible with the GRIM: Single-tier- A single tier standard goes into effect at the specified date. Tier 1 inputs are repeated in tier 2 input boxes. The model behaves as previous versions of GRIM and is based on the definitions described in section P1.2. 2. Delay- The sigle-tier standard is implemented more than three years after the announcement date. A delay is specified in step 3. This scenario gives manufacturers extra time to ramp up investments and redistribute ordinary costs. The redistribution of costs changes the way R&D and ordinary capital expenditures are accounted. These changes are described next in the Additional Assumptions Section. 3. Two-tier- Two standards are implemented at different dates and efficiency levels. Besides being linked to the NES shipment model, this GRIM is linked to the Dryer and Repair GRIMs. This system of impact analysis allows for better aggregation of total economic impact on clothes washer manufacturers.

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# Figure P1.2: GRIM Major Assumptions Page P-8

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# Additional Assumptions for Delay and two-tier scenarios

For the delay and two-tier scenarios several assumptions were reevaluated based on the investment dynamics of the industry. The assumptions concern ordinary R&D, ordinary capital expenditures, and depreciation. Delay Scenario Ordinary R&D 

# It is assumed that a delay in implementation date will allow a portion of ordinary R&D expenditures to be redirected towards meeting standards-induced product conversion costs. This is modeled in GRIM as a reduction of ordinary R&D expenditures in the standard case in each of the delay years. Delay years are the years immediately following the statutory three year implementation time table. For example a standard announced in 2001 would normally be implemented in 2004. If the effective date is delayed to 2007 then 2004, 2005 and 2006 are delay years. In these years the magnitude of the reduction in ordinary R&D is the lesser of50% of Base Case ordinary R&D and the total standard-induced marketing and design costs divided by the number of delay years. Delay Scenario Ordinary Capital Expenditures 

# Ordinary capital expenditures are the investments associated with maintaining and replacing existing production assets. In the Base Case the GRIN'! models ordinary capital expenditures as a percentage of revenues. In the Standards case in the years following the standard, ordinary capital expenditures are equal to Base Case ordinary capital expenditures plus the value of capital expenditures necessary to replenish the used portion of standards-induced capital expenditures (Conversion Capital Expenditures divided by Useful life). Given a delay in implementation date, manufacturers can better plan their ordinary capital expenditures and fully depreciate that portion of their production assets that will not be required after the standard. In order to model this effect the following steps were taken: The value of "stranded" production assets is estimated for each standard level. This calculation is detailed in chapter 11 and is incorporated under the sheet labeled "capital conversion" in the GRIN/I. Since stranded assets do not need to be maintained, for each delay year, the ordinary capital expenditures in the Standard Case are equal to Base Case capital expenditures reduced by a factor equal to the percentage of stranded assets. The total reduction in Capital Expenditures is capped by the amount of capital conversion costs. Two-tier Scenario Ordinary R&D 

# In a two-tier scenario a first standard (tier one)is followed by a new standard (tier two), 3 or more years later. Introducing a delay in the implementation date for either standard reduces ordinary R&D expenditures as previously described. P-i 0

# Two-tier Scenario Depreciation Tier one production assets' depreciation life is the difference between the tier one and tier two standard years. The maximum number of years the production assets have to depreciate is still the useful life. For example if tier one standard goes into effect in 2004 and tier two standard goes into effect in 2007 then the production assets from the tier one standard depreciate in three years instead of the useful life. Two-tier Scenario Ordinary Capital Expenditures As previously described, introducing a delay in the implementation date for tier one reduces Ordinary Capital expenditures for the delay years leading to tier one. In the years between implementation dates ordinary capital expenditures consist of two parts. As previously described for the Delay Scenario Ordinary Capital Expenditures, capital expenditures equal Base Case ordinary capital expenditures reduced by a factor equal to the percentage of stranded assets. The total reduction in capital expenditures is capped by the amount of capital conversion costs. A second part consists of reinvestment in tier 1 assets. This reinvestment is expressed as a fraction of normal post standard capital expenditures (Conversion Capital Exp./Useful_ life). Capital expenditures after tier two are Capital Exp._Pre-regulation + (Conversion Capital Exp. Tier 2/Useful_ life) Two-tier Scenario other cash flow outputs The behavior of the remaining outputs presented in section P1.2. for a two-tier scenario are additive or standard specific. Costs including unit price, labor, equipment, overhead, and working capital are standard specific meaning those costs are associated with the standard being analyzed at the given point in time. The costs change when a new standard is implemented. Product and capital conversion expenditures are additive and are characterized by investing activities leading up to the implementation of a new standard. 

# P.2. EXHIBITS See exhibits for additional information.

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## 4 .C -Ji .. . ;. ! 'ni 'I. ii ' n.1 - 12: .• -, I:: ;:4::; ': ø .. .-2. all Y .alI .. : .. .I - •:' : . -: 11111 •J



# ...........

...... ...... . j:;. 14: .4 iJ1 I-lEr i•. r 'U IlL 1. .121: . L1Ij?_.. 1 jn . .;.' --. 1 ,iIl Il ' .,; k414 •;. '.1 2t 1. 11 4.1 , I::, 141! .2 11 iLL; .11 1' I •1 i .1 1111 ;1 1T! :p w.. 1 :.i(_7::.pI4IIi.,__ -' '- 1 L 41) .1.2.•.ijlI ;.Ll I •. I.:

. 2 .EL: . 21. . 2. 2.. ;. .,,. ;. 1 . . n.:.. TI •:'r .! . .-l.: 11. ;.i. .1:;>: .,r. Or ;:''i •i. n;; .; LI.: jI.,; I.•: 4.11i i l 4.21 4.41 J• j 4J, II.l

- t.• DI.-:- ..I - L11 .(.1I. IL IlV .4.I.. j..l _. c.n-1'ff.. Il.- •:' Iv 111:1. - 11 ,i: .. SI a i Si . .. t ;. 1 1

- .._ 

## Exhibit. P2.13 Standard Cash Flow, 35 percent Standard Level (no consolidation, medium-price elasticity scenario) -V and Haxis market segments combined

P-24

# medium-price elasticity)

P-25



# Exhibit P2. 14 Results for the 35 percent Standard Level (no consolidation,...

- 

# ; :.::

# ;:;
!•I1 17... -- ._.,:.-. .

.. 

# 1'
. ,

... 

# J. 

# 'i ::,

ii 1

- i - ..

- ": . . .. . 

# F 

# _ . F.



## -j ;.::F 

# ii 

# I LI N

# Dryer Shipitiens

_________ 

# 5.51 

# $ 5.29

--



# Total Revenues

- 

# $JOUOO[r) 

# $ 1,213.6

# 1$ 1,166.5

- 

# ProfitAfterTax 

# I($UUUUCUj 

# $ 43.0 

# $ 40.0

- 

# lndusfryValue ThiPrisrdVthie) C$U0UaOO) 

# $ 665.1 

# $ 64&3 Change in Tndusfry Value $OOCç000) .$ (1 6.8 %CIiangeinlndustr7Value -23^Exhibit P2. 16 Results: Dryer Cash Flows, 35 percent Standard Level (mediumprice elasticity)

P-27

# sosniss 

# 3504 BieYeir Stindrd Vein 

# 19 2WJ 2(01 102 2(03 2(04 2(05 201 211)7 201 21029 2010 

# 2011 2012 2013 2(114 2015 2016 2017 2018 2019 2020 Rairs 9.7455 9.8202 9.9327. l5542 102227 10.6207 

# 10.5 11.1355 11.348) 115420 

# 11.7169 11.1043 12.0192 121259 1221(0 

# 12.2820 12.3512 12.4446 

# 12.5710 12.7431 12.9559 13.1841 Renenues 216.5 212.3. 214.5 217.4 220.8 235.6 

# 235.1 240.5 245.1 249.3 

# 253.1 255.7 259.6 261.9 _ 263.7 255.3_ 256.8 

# 10.8 271.5 

# 275.3 279.8 284." NetlncomeBereFinancing 16.5 10.6 10.7 10.9 

# 11.0 11.5 11.8 12.0 12.3 12.5 12.7 12.8 13.0 13,1 13.2 13.3 13.3 13.4 13.6 13.8 14.0 14.2 Net Cash Flow 16.5 10.6 10.7

_ 

# 10.9

_ 

# 11.0

_ 

# 11.5

_ 

# 11.8 12.0 12.3 12.5 12.7 12.8 13.0

_ 

# 13.1 13.2 13.3 13.3 13.4 13.6 13.8 14.0 14.2 Terminal Value

________ ___________ 

# 214.1 

# Present Value Factor 1. 09376 02792 02241_ 

# 0.7730 0.71 07% 0372 _ 05975 

# 0.2

_ 05253 _ 

# 0.4525 6.4510 0.4330 0. ______________ 

# 07 

# 03570 ___ _



# 0.3347 ________ 

# 0.3130 __ 

# 0.2943 02759 02507 

# DiscauntedCashFlow

_______ 

# 16.5 10.6 9.4 9.0 8.5 8.3 8.0 7.7 7.3 7.0 6.6 6.3 6.0 6.7 5.4 6.0 4,8 4.5 4.3 4.6 3.9 59.1 Industry Value (Net Present Value) $ 21112 

# Exhibit P2. 17 Standard Case Repair Cash Flows, 35 percent Standard Level (medium-price elasticity)

P-28

# price elasticity)

P-29



# Exhibit P2. 18 Results: Repair Cash Flow,35percent Standard Level (medium.04p2: NESIe.prLe ENERGYPRICE PROJECTION 

# j AEO 1999- Refrenne Case STANDARD CASEDESIGN(rierul &TierO2) MEF = 1.04 MEF 1.26 StaedaStsrtlCesre 20041 I 20011 Water earolafloes rate Medimes - DiocmmtRate: 

## I 3.:4 Ammal% increase ofH-e,da 

## oJuoI



# ........ 2 Skioeaoi Sneoa,4ao Selartp,*ce ekosIicity top.iuadkegfaohr,e DftIv, ap.dntuodaefeyeL Real diothAR aesdpmvided ha the She,oent Forecast sheet Detailed ,eeoodelhqesait um in yelio.e cellsJo inpads' eheei Price Elasticity Income EIasticit:

Medium None Top-LoadingElasticity: Price/Income Elasticity: Medium None Price Markup: - Interestor CreditElasticity: Medium Markup None Set Cmrent Scenario

__________ tiearsrdyeurno.to Baseline scot 2004. Stp3 FesoadoiropsJrfo. GRtMne.lyd Tarhete 420% DiscacorotRot, foe NPV loftationRote ___________ 0%

### I"•' cnnc:c: WockiugCapitel Net Pcopeety,F1.oat&Eytpment 10 24.30% n(fc I: /1o.::.- ta.o4oedSD&A 100% Research andOevelopotent 12% cr Oadiao.eyDepee:iotion 3.01% p Ooc.,:cc, OcdooeyCepctd itçpeccdthccee .390% ccfc.cc Shoat_temnVari.hieOv,ehe,4o.,% 60% :l):. . ccc c crc/ccc2cfc cc9.cccc ofTatsi c..c ncocc,:c% c . ccdc:ccf c :2cc '_l: Slop 4c ScasasfarforGRIM aoiyo, Dely yes

0:-,:.: :cc:cc 0..: 0hen:o beset 100% Coosoid.tiosoScenscio no Range 2 42'r-i hOoc SOapS: 01,pairGRIMle.pseto AveesgyRepsiccoet iiooo 000% [Put. Split 200% öeep.irmsek,t close, - lthor 1021% OEMeepeieoteeketeheee.pute

Pratt 2.90% -.2cl%c.c,::co 'Stop hRaoeoeodal 

# Exhibit P2. 19 GRIM Major Assumptions Sheet: Two-Tier Standard Level (no consolidation, medium-price elasticity scenario) P-30

# 1 LJ.r j.I ':: 1.1 

## I) 

# JJ Car! 1' YAthI ILA' T' 1JrTPt 47. I(ij.4'!! 

# I i I tI 

### 032 Ti4:

Jiai 

# ) __L. _^L :'.Jp'.i11 L'pLL.:. 3 Ip--; 

## IrE 

# iiiirn.fi'i

__________________________________ h ' 

### Fiii_..l

# a.Pi Ii I Eir T rrmrL Z



# _

__________________________ 

### 1f$Ir 

## MO w Trw,ir l4Ur Uwt 

## N' i.tiI (iL LiLC. i'ii: iii V i nI 'ijt;



## U 

# .n lwbIid 

### i.Ihj tidjI!* (4 IVthi 1JI1 LW

M ai .f 1r.u

uIi 

# rit L!LI g9 L'• .) 4• iifr

M3• r .'r i'IFiE1i 2ot . - .2 i .. kp •1•fl •: 

# 1 ii rjq (r.•(i; %jiI.J iibIi. Tc..R-+ IYCn-i! -- 1 I(.!I) - I ______ Piri1 pi1-J tIriI!ii ic. L? i5 - - - - . Ip' wflJ DwpErouciviip ]-1

_________________________ _________ I 

# Exhibit P2. 20 Welcome GRIM Sheet: Assumption for

# the Two-Tier Standard Level (no consolidation, medium-price elasticity scenario) 

# P-3 1-.
• ••:• -i L1 •' -. 4 - I r 4, -- _______________________... . _._. -
- I I I i'El -* 1] ' 

## i I 

## i'1 j -i -

_______ I• 

# _ ; 

# L J

-- 

# EL H 1 '[ I1!1J W ! i 7dIJ ]f"l Y U! I Ii - TcT I'1 V1 j W J1IJ_ U !! pr p. 

## ! I -' . 

## .h1 i I!! k€! 

## ]

- - _ -- .. 

## iii1



# _ LI II 

# ____Ll u

# __ iJ ial

# _ u1i 4



# _ .J 4i 1t J U'; L I".' IYi U1 U:•: -- .u I!) i i . :i. j III ct-. i FI - .;j .i ii .. -i fl - I I flU It 1U fl



## I

. - 11 .U '12 A U I I lxi I .11 1.1I lt Ii 1 r r IL. 'I i1 ILl i lu, i iii q ' j ,, f. i! p J, , I, . ii.;: 1111 L.I 1'ii r xl: l xi :1:; c'i 

## - I I LU 1 1 

## I1 4&I 

# tiI .U i.1 T1T1_

-



# ___r1 

# ___ ITTI

# _:

# _ I'!l'.I


# _( 1'] •i: 

### n]


# _ri 1I

# _L



# _1 

# _ 1

TT Il ,I IT' V.L JYZ'.L II 1l II .T.Ip 1 

### r: JL. ElI iL"I •L2 IT. 11111 .- -. ill. :1 lJi di 1 ,'i i "II P MU Ml Hi : 2-, ..::lJ I.Iil ,'T.: J'4 1i! a IlU IU Iai IilI 1ii N Il' !l ':'ij LiiIfl' li :• - l.• l7 x Ii 11 .i i .i' • IJI ; 1 

# Exhibit J2. 21 V-Axis Standard Case Cash Flows, Two-Tier Standard Level (no consolidation, medium-ps scenario)

P-32- -

- - .. - . -
-- -. - . -.

- . F.1 !TIt: . ...

- H .6 JY 3

- .-

- - . . .- - . . .J . - - . . rc 54 .5- -.1 . - . . ... .• . . . -

H ;- !. r t cr c..! .s H. :: -- - . .•• H J cc . - 44.

r i'c 

# .1 c: . .r i.:. - ,. . .iuc . c-c ;- c-- - .-c ;.H •.cr

- .1 -r• :. -

. .. -.- cc

- ,.. •,. :- --

. H . .. . .. -. . H:. -, -. . .

. .., .:.c. •c.c L. c. •H: •c• ..!- .1, H.! F t c cc. .-. -. .1' . c! is. c*4 1... .4! ..:.:. .L . 

### ç fl

- -. -5 ,.- • FIN! .. - I . . - : - . - .. .5- •it-a • ..-i5r 5H.-..-c H rs 55r_

. - I ..• - - . . S - 51 cc 4. 44.5: 444444 .sc L4M4

- .L 4 

# Exhibit J2. 22 H-Axis Standard Case Cash Flows, Two-Tier Standard Level (no consolidation, medium-price elasticity scenario)

P-33tra can in - lam - 71* ___ - ___ . .U 

## u



# .......... L&. 71 ; I'c 1 1c I*i rI . IF' L' ..1 ji; JI ulc'T I.J i1r tj IF F•.•• - - - " . ' - I-;- :. Iti l.F CI ii jtA -'-: _ .. . - FYC .-- ^' _.-. __ . .L -C.. _•. k.1 uaiJ1*icj ! j:1 cjic U tc cc --C 1Ji cJ r_ _: ;-.i; i iFI.! cc. .& i 41. 4.1 :- Cc C. .J .1 1 .1:1 ._4 .4F flP . - -' Ui 3p *j3 ffl :F Ci F4, ZI F 4 -i•• 1. 1 .1C 1! 1. . 1: c

I4C 41 iF F. ..C. cc .c.. I ., 1 ,,-. Cc FIC! -h C ti FJ ci.. i Lc iL c i 1cP 1-ic- . :: . - ;.,.. c cc I c H '.92 i.- ii .F 1)919 :i: .1 - I_cl C. 1.1: IJI c .. i1 c .- .i .. •• C' .r _c _i c .c,c ..!c A) .-c .•i_ _-Fc .1. L)i.i 4..-, ..*4.-., -cJ9 ;..4 J . IC :1Cc F:. -.,J.a,,,.L . F, I 1 1 .1 F. . . F - - . 9 1. I _• F 1. r Iii c In r:'n' : iy. F r- T'I '21 a. . - . I - ,?. •- c'l -:I. 2- :ITI iIiiC Ei. ..F, FSFU :1:. (9I. .21 .1 cC.' 14 .L.) 9t9 IJ., c). .J..c_. .41. %r ',. i : .1 'I 91 'i. .9_F: '.1 CI'Lc JItJt 034 cclii -.• 1.- 4l- ci... ..i_. i., a_c. ,acL ,.. .. cc. _.i ...

9393 i3cq l4c (a'i c k4J 3.i li 3iC3 fl4 Ri3 LU3 m 1 331 C'.9L lc 3 (. 131 13 13.43 c. .j 131341 1331 U 1)9 .J) .2'. ccl CC .34 i& i3 F.9. .923 -ci C.. CP 13ti9 -.-.----.- -__-.- -rn-rn- -rn-... -rn- _______ ":.-'-- - 

# Exhibit J2. 23 Standard Case Cash Flows, Two-Tier Standard Level (no consolidation, medium-price elasticity scenario) -V and H-axis market segment combined

P-34

# tS!n

_______________ 

# j(UOC'JJOD) 7.74 

# $ 7.89 7.39

Priceperunit 

# $ 292.8 

# $ 338.0 450.3 TotaiRevenues ($UOD,000) 

# $ 2,311.9 $ 2,666.0 3,552.1 Profit After Tax ($JOI:',COCI) 

# $ 87.9 

# $ 179.5 108.9 ________ - 

# NetCashFlow (IJ11JCF(Jr)) 

# $ 63.5 

# $ 23.1 27.7 btdus1ryValue (tPsuitVo1u2) (]DO.UUO) 

# $ 1,439.1 

# $ 1,027.3 NA

__________ ________ ______ ________ 

# çJLa.1Igei]1l4V

__ ___ ______ ___ ______ 

# 28.6

___ 

# Conversion

# Cost ________



# Caita1Ependitures ($OOUDDQ Design &Marlcetin Expenses ft$000.000) 

# $ $ 268.6 83.4 633.4

181.8 

# Exhibit J2. 24 Results for the Two-Tier Standard Level (no consolidation, medium-price elasticity)

P-351k.. F.. _______________ II T 1f• .. 1.111 (1 l1 5it 'I Th

__ 

# i 

# -r- __________!._

# 1_•i_ -p.

_______________ --I--
-- 

# JJ_ Fr

- $'4iIr]L!jJlj L.:. I.:;r 1.1II lj.11J LI( .' .:..ti JI. LcFi Irl I;.. .j ;.. I4 i.s: I!Ql IS: ! r :i O 1l II) H; u. U H. 4 i; i k;i I4 k iJl

. I 

### S .:Hk 

# .............•.H 

### O :4:.. L . 

### T442 IF! Fl! ..,.l..i .-.p.J 1.4 U I •1!.r II II 1414 r. lt 4U : çF 414SF JLi Ill .! II. Ii.- 7 Il III li. 4.2 43 4J 2 Ii: IF 1:1 4 I' I.F • II.

'2J• 7. TJ:I... I .j:•.. . :.'L ;Hr .InI M4$ i .: :.I 2514 254' .nI Iii. :lD I . r.s 1 251 ..r 4t .. 1 L 25 .i.41 I 1ft1L&jiT.. - . T4 I'.-' Fl 4 141 Hr H Fr ' 91 sJ r 5 F 914 91 t!4 

### I2 S4 Fl 

## : i i' ti 41 :J: .' ;• 

## s FFFF[.FI: Fl.I. 41 414 '1€ Ll IL 444 p: 4L. F. 1. •F '445 . .11 •. I 411 F I . F 414 IjI!. "F -H 4r .: 49114 

### F '4 4; 45 254 447 144 444 3*4 474 444 9n,sj 49 255
. 

# Exhibit P2. 25 Standard Case Dryer Cash Flows, Two-Tier Stand: 1r ':J 441 . IF lid F5 PU 4 44 4 HI iL !:. a l- •. 4.1 rj :19 i F .1 Fr;'J- 'I.. rH Jr 255 r r V •r Ir-n r.' lrr nj "i' 45 IjII L S.. ,; .. n.. .,.U 44' 59. iIF4 ' Fl 4* .•. ...• p41. 

### 494 444 34. 34 445 444 4 I MT 449 MI I FIai:- is, 

### 4 9541 nj 4_- 4."- •r 445 p :n . 4111 ii 4 I Il-I 14 I.; : F ilk.:-. 

# ird Level (medium-price elasticity)

P-36

# price elasticity)

P-37



# Exhibit P2.26Results: Dryer Cash Flows, Two-Tier Standard Level (medium# -_2% Ve Stndd Uer 

# l39 103 101 2932 2933 2934 29 2ff0 2927 20)3 109 2010 2011 112 113 2014 2015 2016 

# 2011 2019 2019 2020 

# rs

___ 

### 123220 123232fl24775 01 1Th1 

# i3 131510 

# Revenues 210 2121 214,5 

# 217,4: 220. 

# 231 231.6. 232.6 24&024 25326L423.5 20 267269.57 2741216210.3 i tlncaieBereFascing 10.6 16.6 10.7 10.9 11.0 11.3 

# 11.6 11.6 12.2' 12.4 12.7 12.9 13.0 13.2 13.3 13.4 13.6 13.6 13.7 13.8 14.6 14.2 

# Oet Cash Flow 10.6 10.6 10.7 10.9 11.0 11.3 11.6 11.0 12.2 12.4 12.7 12.9 13.0 13.2 13.3 13.4 13.6 13.6 13.7 iao 14.0 14.2 

# leveival Velu

_________ ________ 

### __________________________________ - - 

### _____________ rn -_ ______________ 

# 213.6• Prese ValueFaor 1. 09376 02792

_ 

# 0.8244 0.77

_ 

# 0.7249

_ 

# 0.67%

_ ___ 

# 0.6372

_ 

# 0.5975

_ 

# 0.5601 ____________ _- 

# 0.52.53 0.4925 0.4910 0.4334 _ -



# 0. 0.3017 0.3570 0.3347 -- -



# 02130 0.43 02759 0.2507 scounled Cash Flow 10.5 10.0

_ 

# 9.4 7.5 727.0

_ 

# 6.6

_ 

# 6.3 6 51 6.4

_ 

# SlOtS t3 4i 3.9 Exhibit P2. 27 Standard Case Repair Cash Flows, Two-Tier Standard Level (medium-price elasticity)

P-3 8

# #of Repairs

____________ 

# (UDi)1JQU) 

# 9.75 

# $ 10.50 11.29

Total Revenues ($Oi]U,C100) 

# $ 210.5 

# $ 226.7 244.0 Profit After Tax $UD[i,UUO) 

# $ 10.5 

# $ 11.3 12.2 litciustry Value

# ( tPisit

# Vithi) ($UDUUUO) 

# $ 200.2 

# $ 201.0

________ 

# Cliangaii

# hulustry Value C(JOOOCI) 

# $ 0.9 %ChaiigeinlitdustryValue

_____ _____ _____ 

# 0.4% Exhibit P2. 28 Results: Repair Cash Flow, Two-Tier Standard Level (medium-price elasticity)

P-39