Black sheep broadcasting is considerinf an investment that eull have the following sales, variable costs, ans fixed operating costs:
Consider the case of Black Sheep Broadcasting: Black Sheep Broadcasting is considering an investment that will have the following sales, variable costs, and fixed operating costs: Year 4 Year 1 5,500 $42.57 Year 3 5,700 Unit sales (units) Sales price Variable cost per unit Fixed operating costs except depreciation Accelerated depreciation rate Year 2 5,200 $43.55 $22.97 568,950 5,820 $46.79 $23.87 $68,900 $44.76 $23.45 $69,690 $22.83 $66,750 33% 45% 15% 7% This project will require an investment of $10,000 in new equipment. The equipment will have no salvage value at the end of the project's four-year life. Black Sheep Broadcasting pays a constant tax rate of 40%, and it has a required rate of retum of 11%. (Hint: Round each element in your computation- when using accelerated depreciation, the project's not present Value (NPV) is including the project's net present volue-to the nearest whole dollar:) (Hint: Apain, round each element in your computation-Including the when using straight line depreciation, the project's NPV project's net present value-to the nearest whole dollar) Using the depreciation method will result in the greater NPV for the project No other firm would take on this project if black Sheep troadcasting turns it down. How much should Black Sheep Broadcasting reduce the NPV of this project of discovered that this project would reduce one of its division's not after tax cash flows by $400 for each year of the four year project! $1,241 $931 ure. Box Sheep broadcasting pays constant tax rate or 40%, and mass required rate or retum or 11%. When using accelerated depredation, the project's net present value (NPV) Including the project's net present value-to the nearest whole dollar.) (Hint: Round each element in your computation (Hint: Again, round each element in your computation-Including the When using straight-line depreciation, the project's NPV is project's net present value-to the nearest whole dollar) Using the depreciation method will result in the greater NPV for the project. No other firm would take on this project if Black Sheep Broadcasting turns down. How much should Black Sheep Broadcasting reduce the NPV of this project if it discovered that this project would reduce one of its division's net after-tax cash flows by 5400 for each year of the four-year project? O $1,241 $931 $1,055 $1,365 Black Sheep Broadcasting spent $2,500.00 on a marketing study to estimate the number of units that it can sell each year. What should Black Sheep Brandcasting do to take this information into account? The company does not need to do anything with the cost of the marketing study because the marketing study is a sunk cost. O Increase the amount of the initial investment by $2,500.00 Increase the NPV of the project $2,500.00
