Jane Thompson is managing a team of analysts assigned to thereport on firms operating in the mining industry. The team iscurrently researching and analysing a firm that mines for lithium.The last 5 years the company has benefited from an increase in theprice of lithium of about 10% each year, and has returned a largeprofit. The members of Jane’s team insist that this will continue,and that the forecast sales growth rate in their model should be10% for each year. On the other hand, Jane is concerned that ifthis growth in the lithium price does not continue, the profits andvalue of this mining company will be negatively affected.
Discuss the problem that Jane faces with her team’s approach.Recommend a course of action that Jane can use to ensure theanalysis conducted by her team is reasonable and accounts fordifferent contingencies (possible outcomes). Explain how thisshould be presented to the potential investors.
