2000 110705.000.00 51.10.000.00 O. 10000 11.00.00 60 (Related to Checkpoint 13.2 and Checkpoint 13.8) (Comprehensive risk analysis) Blinkeria is considering Introducing a new line of hand scanners that can be used to copy material and then download it into a personal computer. These scanners are expected to sell for an average price of $95 each, and the company analysis performing the analysis expect that the firm can sell 108,000 units per year at this price for a period of five years, after which time they expect demand for the product to end as a result of new technology. In addition, variable costs are expected to be $18 per unit and fixed costs, not including depreciation, are forecast to be $1,080,000 per year. To manufacture this product, Blinkeria will need to buy a computerized production machine for $9.5 million that has no residual or salvage value, and will have an expected life of five years. In addition, the firm expects it will have to invest an additional $307,000 in working capital to support the new business, Other pertinent information concerning the business venture is provided here: a. Calculate the project's NPV. b. Determine the sensitivity of the project's NPV to ain) 40 portent decrease in the number of units hold c. Determine the sensitivity of the project's NPV to an) 10 percent decrease in the price per unit d. Determine the sensitivity of the project's NPV to (n) 10 percent increase in the variable cost per unit. .. Determine the sensitivity of the project's NPV to an) 10 percent increase in the annual fixed operating costs Transit the North the new Thawab the war The NPV for the buse-case wil be $ 11,362,148. Round to the nearest dollar) b. The project's NPV to ach) 10 percent decrease in the number of units old will be s I (Round to me nearest dolur. ne SHAMPOO .600.00 1113DOO BUDGET TOP al t T- TOT performing the analysis expect that the firm can sell 108,000 units per year at this price for a period of five years, after which time they expect demand for the product to end as a result of new technology. In addition, variable costs are expected to be $18 per unit and fixed costs, not including depreciation, are forecast to be $1,080,000 per year. To manufacture this product, Blinkeria will need to buy a computerized production machine for $9.6 million that has no residual or salvage value, and will have an expected life of five years. In addition, the firm expects it will have to invest an additional $307,000 in working capital to support the new business. Othenpertinent information concerning the business venture is provided here: 1 Calculate the project's NPV. b. Determine the sensitivity of the project's NPV to ain) 10 percent decrease in the number of units sold. c. Determine the sensitivity of the project's NPV to a[n) 10 percent decrease in the price per unit. d. Determine the sensitivity of the project's NPV to a(n) 10 percent increase in the variable cost per unit. e. Determine the sensitivity of the project's NPV to a(n) 10 percent increase in the annual fixed operating costs. f. Use scenario analysis to evaluate the project's NPV under worst- and best-case scenarios for the project's value drivers. The values for the expected or base-case along with the worst- and best-case scenarios are linted here: a. The NPV for the base-case will be $ 11,362,148" (Round to Data Table b. The project's NPV to a[n) 10 percent decrease in the number Initial cost of the machine $9,600,000 Expected life 5 years Salvage value of the machine $0 Working capital requirement $307,000 Depreciation method straight line Depreciation expense $1.920,000 per year Cash fixed costexcluding depreciation $1,080,000 per year Variable costs per unit $18 Required rate of return or cost of capital 9.1% Enter your answer in the answer box and then click Check An Tax rate 34% 33 ro parts 5 remaining Print Done s expect that the fim can sell 108,000 units per year at this price for a period of five years, after which time they expect demand w technology. In addition, variable costs are expected to be $18 per unit and fixed costs, not including depreciation, are forecast To manufacture this product, Blinkeria will need to buy a computerized production machine for $9.6 million that has no residual or ted life of five years. In addition, the firm expects it will have to invest an additional $307,000 in working capital to support the ne ation concerning the business venture is provided here: SINPVA iti Data Table expecte Worst Case Best Case Unit sales Price per unit Variable cost per unit Cash fixed costs per year Depreciation expense Expected or Base Case 108,000 $95 $(18) $(1,080,000) $(1.920,000) 75,600 $86.45 $(19.44) $(1,296,000) $(1.920,000) 140,400 $112.10 $(16.56) $1982,800) $(1.920,000) Print Done