You are considering a new product launch. The project will have an Initial cost for fixed assets of $1,150,000, a three year Iife, and no salvage Sales are projected at 230 units per year, price per unit will be $7,500, varnable cost per unit will be $3.900, and fixed costs will be $122,000 per year The required return is 14.5 pereent and the relevant tax rate is 24 percent. Based on your expertence, you think the unit sales and price are accurate within a2 percent range while costsmay vary by +3 percent. What is he worst-case NPV? Ine to
You are considering a new product launch. The project will have an Initial cost for fixed assets of $1,150,000, a three year Iife, and no salvage Sales are projected at 230 units per year, price per unit will be $7,500, varnable cost per unit will be $3.900, and fixed costs will be $122,000 per year The required return is 14.5 pereent and the relevant tax rate is 24 percent. Based on your expertence, you think the unit sales and price are accurate within a2 percent range while costsmay vary by +3 percent. What is he worst-case NPV? Ine to
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 17P
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