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Emperor’s Clothes Fashions can invest $4 million in a new plant for producing invisible makeup. The...
Emperor’s Clothes Fashions can invest $4 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and expected sales are 5 million jars of makeup a year. Fixed costs are $3.4 million a year, and variable costs are $2.60 per jar. The product will be priced at $3.80 per jar. The plant will be depreciated straight-line over 5 years to a salvage value of zero. The opportunity cost of capital is 11%, and the tax rate is 30%.
a. What is project NPV under these base-case assumptions? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
b. What is NPV if variable costs turn out to be $2.70 per jar? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
c. What is NPV if fixed costs turn out to be $3.2 million per year? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
d. At what price per jar would project NPV equal zero? (Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to 2 decimal places.)
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Emperor’s Clothes Fashions can invest $4 million in a new plant for producing invisible makeup. The...
Emperor’s Clothes Fashions can invest $4 million in a new plant
for producing invisible makeup. The plant has an expected life of 5
years, and expected sales are 5 million jars of makeup a year.
Fixed costs are $3.4 million a year, and variable costs are $2.60
per jar. The product will be priced at $3.80 per jar. The plant
will be depreciated straight-line over 5 years to a salvage value
of zero. The opportunity cost of capital is 11%,...
Emperor’s Clothes Fashions can invest $4 million in a new plant for producing invisible makeup. The...
Emperor’s Clothes Fashions can invest $4 million in a new plant for
producing invisible makeup. The plant has an expected life of 5
years, and expected sales are 5 million jars of makeup a year.
Fixed costs are $2.7 million a year, and variable costs are $1.20
per jar. The product will be priced at $2.40 per jar. The plant
will be depreciated straight-line over 5 years to a salvage value
of zero. The opportunity cost of capital is 12%,...
Emperor’s Clothes Fashions can invest $4 million in a new plant for producing invisible makeup. The...
Emperor’s Clothes Fashions can invest $4 million in a new plant
for producing invisible makeup. The plant has an expected life of 5
years, and expected sales are 5 million jars of makeup a year.
Fixed costs are $2.7 million a year, and variable costs are $1.20
per jar. The product will be priced at $2.40 per jar. The plant
will be depreciated straight-line over 5 years to a salvage value
of zero. The opportunity cost of capital is 12%,...
Emperor’s Clothes Fashions can invest $5 million in a new plant for producing invisible makeup. The...
Emperor’s Clothes Fashions can invest $5 million in a new plant
for producing invisible makeup. The plant has an expected life of 5
years, and expected sales are 6 million jars of makeup a year.
Fixed costs are $2.8 million a year, and variable costs are $1.40
per jar. The product will be priced at $3.00 per jar. The plant
will be depreciated straight-line over 5 years to a salvage value
of zero. The opportunity cost of capital is 14%,...
Emperor’s Clothes Fashions can invest $6 million in a new plant for producing invisible makeup. The...
Emperor’s Clothes Fashions can invest $6 million in a new plant
for producing invisible makeup. The plant has an expected life of 5
years, and expected sales are 7 million jars of makeup a year.
Fixed costs are $2.2 million a year, and variable costs are $1.80
per jar. The product will be priced at $2.60 per jar. The plant
will be depreciated straight-line over 5 years to a salvage value
of zero. The opportunity cost of capital is 10%,...
1.Emperor’s Clothes Fashions can invest $5.14 million in a new plant for producing invisible makeup. The...
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plant for producing invisible makeup. The plant has an expected
life of five years, and expected sales are 6.14 million jars of
makeup a year. Fixed costs are $2.35 million a year, and variable
costs are $1.35 per jar. The product will be priced at $2.35 per
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Problem 10-8 Sensitivity Analysis (LO3) Emperor’s Clothes Fashions can invest $6 million in a new plant...
Problem 10-8 Sensitivity Analysis (LO3)
Emperor’s Clothes Fashions can invest $6 million in a new plant
for producing invisible makeup. The plant has an expected life of 5
years, and expected sales are 7 million jars of makeup a year.
Fixed costs are $2.5 million a year, and variable costs are $2.60
per jar. The product will be priced at $3.40 per jar. The plant
will be depreciated straight-line over 5 years to a salvage value
of zero. The opportunity...
Please show all work. Mahya Fashions Inc. can invest $5 million in a new plant for...
Please show all work.
Mahya Fashions Inc. can invest $5 million in a new plant for
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year. Fixed costs are $2 million a year, and variable
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