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Scenario Analysis We are evaluating a project that costs $1,160,000, has a ten-year life, and has...
Scenario Analysis
We are evaluating a project that costs $1,160,000, has a ten-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 44,000 units per year. Price per unit is $45, variable cost per unit is $20, and fixed costs are $645,000 per year. The tax rate is 35 percent, and we require a 20 percent return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±10 percent. Calculate the best-case and worst-case NPV figures. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))
NPV Best-case $
Worst-case $
Solutions
jeff jeffy answered 3 weeks agoRelated Solutions
We are evaluating a project that costs $1,160,000, has a ten-year life, and has no salvage...
We are evaluating a project that costs $1,160,000, has a
ten-year life, and has no salvage value. Assume that depreciation
is straight-line to zero over the life of the project. Sales are
projected at 44,000 units per year. Price per unit is $45, variable
cost per unit is $22, and fixed costs are $645,000 per year. The
tax rate is 24 percent, and we require a return of 20 percent on
this project. Suppose the projections given for price, quantity,...
We are evaluating a project that costs $1,160,000, has a ten-year life, and has no salvage...
We are evaluating a project that costs $1,160,000, has a
ten-year life, and has no salvage value. Assume that depreciation
is straight-line to zero over the life of the project. Sales are
projected at 44,000 units per year. Price per unit is $45, variable
cost per unit is $20, and fixed costs are $645,000 per year. The
tax rate is 35 percent, and we require a return of 20 percent on
this project. Suppose the projections given for price, quantity,...
We are evaluating a project that costs $1,160,000, has a ten-year life, and has no salvage...
We are evaluating a project that costs $1,160,000, has a
ten-year life, and has no salvage value. Assume that depreciation
is straight-line to zero over the life of the project. Sales are
projected at 44,000 units per year. Price per unit is $45, variable
cost per unit is $20, and fixed costs are $645,000 per year. The
tax rate is 35 percent, and we require a return of 20 percent on
this project. Suppose the projections given for price, quantity,...
1) We are evaluating a project that costs $1,160,000, has a ten-year life, and has no...
1)
We are evaluating a project that costs $1,160,000, has a
ten-year life, and has no salvage value. Assume that depreciation
is straight-line to zero over the life of the project. Sales are
projected at 44,000 units per year. Price per unit is $45, variable
cost per unit is $20, and fixed costs are $696,000 per year. The
tax rate is 35 percent, and we require a return of 20 percent on
this project.
a. Calculate the accounting break-even point....
P11-6 Scenario Analysis [LO2] We are evaluating a project that costs $741,000, has an ten-year life,...
P11-6 Scenario Analysis [LO2]
We are evaluating a project that costs $741,000, has an ten-year
life, and has no salvage value. Assume that depreciation is
straight-line to zero over the life of the project. Sales are
projected at 118,000 units per year. Price per unit is $36,
variable cost per unit is $23, and fixed costs are $749,151 per
year. The tax rate is 33 percent, and we require a 12 percent
return on this project. The projections given for...
We are evaluating a project that costs $1,160,000, has a life of 10 years, and has...
We are evaluating a project that costs $1,160,000, has a life of
10 years, and has no salvage value. Assume that depreciation is
straight-line to zero over the life of the project. Sales are
projected at 44,000 units per year. Price per unit is $45, variable
cost per unit is $20, and fixed costs are $645,000 per year. The
tax rate is 24 percent and we require a return of 13 percent on
this project. Suppose the projections given for...
We are evaluating a project that costs $1,080,000, has a ten-year life, and has no salvage...
We are evaluating a project that costs $1,080,000, has a
ten-year life, and has no salvage value. Assume that depreciation
is straight-line to zero over the life of the project. Sales are
projected at 52,000 units per year. Price per unit is $48, variable
cost per unit is $27, and fixed costs are $756,000 per year. The
tax rate is 25 percent, and we require a return of 15 percent on
this project.
a.
Calculate the accounting break-even point. (Do...
We are evaluating a project that costs $1,180,000, has a ten-year life, and has no salvage...
We are evaluating a project that costs $1,180,000, has a
ten-year life, and has no salvage value. Assume that depreciation
is straight-line to zero over the life of the project. Sales are
projected at 66,000 units per year. Price per unit is $36, variable
cost per unit is $25, and fixed costs are $750,000 per year. The
tax rate is 35 percent, and we require a return of 15 percent on
this project. Suppose the projections given for price, quantity,...
We are evaluating a project that costs $1,080,000, has a ten-year life, and has no salvage...
We are evaluating a project that costs $1,080,000, has a
ten-year life, and has no salvage value. Assume that depreciation
is straight-line to zero over the life of the project. Sales are
projected at 52,000 units per year. Price per unit is $50, variable
cost per unit is $30, and fixed costs are $756,000 per year. The
tax rate is 35 percent, and we require a return of 15 percent on
this project.
a. Calculate the accounting break-even point.
(Do...
We are evaluating a project that costs $1,675,000, has a six year life, and has no...
We are evaluating a project that costs $1,675,000, has a six
year life, and has no salvage value. Assume that depreciation is
straight line to zero over the life of the project. Sales are
projected as 91,000 units per year, price is $35.95 per unit,
variable cost is $21.4 per unit, fixed costs are $775,000 per year.
Tax rate is 35% and discount rate is 11%.
1) calculate base-case profit, profit with a 100-unit increase
or 100-unit decrease, and break-even...
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