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NewCo Petrol Retailer Introduction You are an entrepreneur on an island of 50 million people. You feel that there is an opportunity to invest in petrol retailing and plan to open a new petrol station (there are already 1,000 petrol stations on the island). However, you do not have any meaningful capital and are going to need to raise the investment required so you visit your local banker. She asks you to estimate what capital you are likely to need in the business. [If prompted, the interviewer will clarify that no additional information is available to answer the question.] You have not been given much information with which to form a view of the size of the investment required. Before starting to answer the question, it is worth taking a minute to think through a logical framework to structure your response, and to explain the intended approach to the interviewer at the outset. The approach set out below starts by determining the potential sales of the new petrol outlet, which in turn depends on the total market size and expected market share. The economics of the business are then mapped out to develop an estimate of the profitability of the business. Using this estimate of its profitability, together with a reasonable assumption for the required rate of return on capital, the amount of capital required from the bank can be calculated. A strong candidate would receive no further guidance. Where necessary, candidates would be prompted to address each of the following areas in turn to arrive at an estimate of the capital requirement. Question 1 What is the total market size for petrol retailing? This can be tackled either at an individual or household level. At an individual level, an assumption would need to be made about how many of the 50m population own cars / drive and therefore pur