Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A sports company is starting a new investment to produce a new sport ball. The required machine for this project costs $263,500 . The machine

A sports company is starting a new investment to produce a new sport ball. The required machine for this project costs $263,500 . The machine will be fully depreciated by the straight-line method over its 4 year economic life. Each ball sells $22. The variable cost per each ball is $9, and fixed costs is $103,000 each year. The estimated sales will be 19500 units per year. Firm's corporate tax rate is 40%. The discount rate is 15% for this project. Ignore salvage value and working capital changes,

what is annual operating cash flow $ (Round to WHOLE Dollar)?

What is net present value of this investment $ (Round to WHOLE Dollar) ? I

f sale demand increases by 500 unit, what is new operating cash flow $ (Round to WHOLE Dollar) ?

What is new NPV $ (Round to WHOLE Dollar) ? Calculate the sensitivity of NPV against unit sales demand (Keep TWO Decimals for Sensitivity Ratio)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance And Control For Construction

Authors: Chris March

1st Edition

0415371155, 978-0415371155

More Books

Students also viewed these Finance questions