Question
4, (Capita budgets) 20 marks Given the following cash-flow information on Project D, answer the questions below. Year Project D 07234 -$14,000 Initial investment 1
4, (Capita budgets) 20 marks Given the following cash-flow information on Project D, answer the questions below. Year Project D 07234 -$14,000 Initial investment 1 $4,800 $4,800 $4,800 $4,800 Assuming an interest rate (discount rate) of 10% calculate the following: a) b) c) d) e) Calculate the net present value (NPV) of the project List the steps involved in calculating and interpreting the NPV's Calculate the internal rate of return of the project If the required rate of return is 10%, should the project be accepted or rejected? Calculate the pay back period Question 5, (Cost-Volume-Profit, Analysis) 20 Marks Ganges Ltd has developed the following data for the 10,000 units of vaccine they hope to produce a sell in the following month: Direct materials $50,000 Direct labour $25,000 Variable overhead $40,000 Fixed overhead $15,000 Variable selling & admin expenses $24,000 Fixed selling & admin expenses $16,000 Required: a) At sales price of $19.00 per unit, how many units would Ganges have to sell in order to break- even? b) At a sales price of $21.50 per unit, how many units would Ganges have to sell in order to produce a profit of $20,000? c) If 8,000 units were sold, what price would Ganges have to charge in order to produce a profit a $21,000 d) What does cost- volume-profit (CVP) analysis mean
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