Business, 10.06.2020 02:57 almostnevercbbc

You are considering a new product launch. The project will cost $1,222,500, have a five-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 290 units per year; price per unit will be $19,100, variable cost per unit will be $15,600, and fixed costs will be $327,000 per year. The required return on the project is 15 percent, and the relevant tax rate is 30 percent. Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to within ±10 percent. Required:
a. What are the best-case and worst-case NPVs with these projections?
b. What is the base-case NPV?
c. What is the sensitivity of your base-case NPV to changes in fixed costs?

Answers: 3

Show answers

Another question on Business

Business, 21.06.2019 17:10

All else being equal, which is true about a firm with high operating leverage relative to a firm with low operating leverage? select one: a. a higher percentage of the high operating leverage firm's costs are fixed. b. the high operating leverage firm is exposed to less risk. c. the debt payments limit the high operating leverage firm's opportunities to turn a big profit. d. the high operating leverage firm has more debt.

Answers: 2

Answer

Business, 22.06.2019 20:00

Acompetitive market in healthcare would a. overprovide healthcare because the marginal social benefit of healthcare exceeds the marginal benefit perceived by consumers b. underprovide healthcare because it would eliminate medicare and medicaid c. underprovide healthcare because the marginal social benefit of healthcare exceeds the marginal benefit perceived by consumers d. overprovide healthcare because it would be similar to the approach used in canada

Answers: 1

Answer

Business, 23.06.2019 04:40

Aneighborhood home owners association suspects that the recent appraisal values of the houses in the neighborhood conducted by the county government for taxation purposes is too high. it hired a private company to appraise the values of ten houses in the neighborhood. the results, in thousands of dollars, are?

Answers: 1

Answer

Business, 23.06.2019 08:20

Marque a alternativa que apresenta somente as opções de financiamento com recursos internos: a) lucros, venda de ativos e recursos próprios. b) lucros, venda de ativos e redução no capital de giro. c) lucros, venda de ativos e recursos de familiares. d) lucros, venda de ativos e prorrogação nos prazos para receber os pagamentos dos clientes. e) lucros, venda de ativos e aumento do estoque de mercadorias.

Answers: 1

Answer

You know the right answer?

You are considering a new product launch. The project will cost $1,222,500, have a five-year life, a...

Questions