Please show work. Both images are from the same question You are consldering a new product launch. The project will cost $2,400,000, have a four-year life, and have no salvage value, depreclation Is stralght-line to zero. Sales areprojected at 350 units per year, price per unit will be $19,900, varlable cost per unit willbe $14,300, and fixed costs will be $740,000 per year. The required return on the projectIs 12 percent, and the relevant tax rate Is 23 percent.a. Based on your experlence, you think the unit sales, varlable cost, and fixed costprojections gven here are probably accurate to within ±10 percent. What are theupper and lower bounds for these projections? What Is the base-case NPV? What arethe best-case and worst-case scenarlos? (A negatlve answer should be Indlcated bya mlnus slgn. Do not round Intermedlate calculatlons. Round your NPV answers to2 decimal places, e.g., 32.16. Round your other answers to the nearest wholenumber, e.g. 32.)ScenarioUnit SalesVariable CostFixed CostsNPVBase35014,300740,000BestWorstEvaluate the sensitivity of your base-case NPV to changes In fixed costs. (Anegative answer should be Indicated by a minus sign. Do not round Intermedlatecalculations and round your answer to 2 decimal places, e.g., 32.16.)What Is the cash break-even level of output for this project (Ignoring taxes)? (Do notround Intermedlate calculations and round your answer to 2 decimal pleces, e.g.32.16.)d-1. What Is the accounting break-even levelIntermedlate calculations and round your answer to 2 decimal places, e.g., 32.16.)b.C.output for thls project? (Do not roundH.2 What lc tho rdenroe of oneratioc leverane at the accountings hroak.ovan nolnt? iD Base35014,300740,000BestWorstEvaluate the sensitivity of your base-case NPV to changes In fixed costs. (Anegative answer should be Indicated by a mlnus slogn. Do not round Intermedlatecalculatlons and round your answer to 2 declmal places, e.g., 32.16.)What Is the cash break-even level of output for this project (Ignoring taxes)? (Do notround Intermedlate calculatlons and round your answer to 2 decimal places, e.g.,32.16.)-1. What Is the accounting break-even level of output for this project? (Do not roundIntermedlete calculetlons and round your answer to 2 declmal places, e.g., 32.16.)-2. What Is the degree of operating leverage at the accounting break-even polnt? (Donot round Intermediete calculations and round your answer to 3 decimal places,e.g., 32.161.)b.ANPV/AFCc.Cash break-evend-1. Accounting break-evend-2. Degree of operating leverage

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You are consldering a new product launch. The project will cost $2,400,000, have a four- year life, and have no salvage value; depreclation Is stralght-line to zero. Sales are projected at 350 units per year, price per unit will be $19,900, varlable cost per unit will be $14,300, and fixed costs wll be $740,000 per year. The required return on the project Is 12 percent, and the relevant tax rate Is 23 percent. a. Based on your experilence, you think the unit sales, varlable cost, and fixed cost projections glven here are probably accurate to within +10 percent What are the upper and lower bounds for these projections? What Is the base-case NPV? What are the best-case and worst-case scenarlos? (A negative answer should be Indicated by a mlnus slgn. Do not round Intermedlate calculatlons. Round your NPV answers to 2 decimal places, e.g., 32.16. Round your other answers to the nearest whole number, e.g. 32.) Scenario Unit Sales Variable Cost Fixed Costs NPV Base 350 14,300 740,000 Best Worst

You are consldering a new product launch. The project will cost $2,400,000, have a four- year life, and have no salvage value; depreclation Is stralght-line to zero. Sales are projected at 350 units per year, price per unit will be $19,900, varlable cost per unit will be $14,300, and fixed costs wll be $740,000 per year. The required return on the project Is 12 percent, and the relevant tax rate Is 23 percent. a. Based on your experilence, you think the unit sales, varlable cost, and fixed cost projections glven here are probably accurate to within +10 percent What are the upper and lower bounds for these projections? What Is the base-case NPV? What are the best-case and worst-case scenarlos? (A negative answer should be Indicated by a mlnus slgn. Do not round Intermedlate calculatlons. Round your NPV answers to 2 decimal places, e.g., 32.16. Round your other answers to the nearest whole number, e.g. 32.) Scenario Unit Sales Variable Cost Fixed Costs NPV Base 350 14,300 740,000 Best Worst

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 4P

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