=+18-30 KK DCF, sensitivity analysis, no income taxes (CMA, adapted) OBJECTIVES 3, 4 Listrel Ltd is a
Question:
=+18-30 KK DCF, sensitivity analysis, no income taxes (CMA, adapted) OBJECTIVES 3, 4 Listrel Ltd is a manufacturer of power drills. Management at Listrel is considering expanding the product line to include jigsaws.
From the best estimates of the marketing and production managers, annual sales (all for cash) for this new line are 85000 units at
$45 per unit; cash variable cost is $17 per unit; cash fixed costs are $350000 per year. The investment requires $6000000 of cash outflow and has a project life of six years.
At the end of the six-year useful life there will be no terminal disposal value. Assume all cash flows occur at year-end except for initial investment amounts.
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 9781442563377
2nd Edition
Authors: Monte Wynder, Madhav V. Rajan, Srikant M. Datar, Charles T. Horngren, William Maguire, Rebecca Tan