Veroni Ventures a key distributor of Voltic Water and other assorted products is considering investing Ghc335,600 in a project at Kasoa with a five year life. The project will result in an increase in the company's turnover of Ghc350,000 at additional fixed cost of Ghc110,000 and a variable costs ofGHS150,000. At the end of the project in five years’ time, the assets will be sold for Ghc35,000.The company's required rate of return is 10%. Assuming you are the financial director of such company: (1) How will you determine the Net Present Value of the project of Veroni’s Ventures? (2)Calculate the sensitivity of the investment decision in (a) to the estimates of i. Variable Costs AP ii. Discount Rate
Veroni Ventures a key distributor of Voltic Water and other assorted products is considering investing Ghc335,600 in a project at Kasoa with a five year life. The project will result in an increase in the company's turnover of Ghc350,000 at additional fixed cost of Ghc110,000 and a variable costs ofGHS150,000. At the end of the project in five years’ time, the assets will be sold for Ghc35,000.The company's required rate of return is 10%. Assuming you are the financial director of such company: (1) How will you determine the Net Present Value of the project of Veroni’s Ventures? (2)Calculate the sensitivity of the investment decision in (a) to the estimates of i. Variable Costs AP ii. Discount Rate
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section10.A: Mutually Exclusive Investments Having Unequal Lives
Problem 4P
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Veroni Ventures a key distributor of Voltic Water and other assorted products is
considering investing Ghc335,600 in a project at Kasoa with a five year life. The
project will result in an increase in the company's turnover of Ghc350,000 at additional
fixed cost of Ghc110,000 and a variable costs ofGHS150,000.
At the end of the project in five years’ time, the assets will be sold for
Ghc35,000.The company's required
financial director of such company:
(1) How will you determine the
Ventures?
(2)Calculate the sensitivity of the investment decision in (a) to the estimates of
i. Variable Costs AP
ii. Discount Rate
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