Question
A five-year project is being considered for investment. The product is expected to sell for $500 and the demand is expected to grow at 10%
A five-year project is being considered for investment. The product is expected to sell for $500 and the demand is expected to grow at 10% per year for the next five years. The production volume will initially be 10,000 units. The variable costs are $244/unit, and the fixed costs are $1.3 million. The capital investment required is $3,500,000. The tax rate is 30%. The companys discount rate is10%. Determine the sensitivity of the NPV to the following inputs
a) Growth in demand
b) Initial production volume
c) Price
d) Capital investment
e) Tax rate
f) Discount rate
g) Fixed costs
h) Variable costs
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