Case #4 An Uncertain Future (a case study) Data A small production company has estimated its sales, and sales price over the next five vears as: 4 1400 5 1400 2 Sales Sales Price Variable Costs 3 1400 $100.00 $95.00 $92.00 $90.00 $89.00 1000 1200 $50.00 $52.00 $54.00 $55.00 $55.00 Fixed costs are $20,000 up to 1,250 units produced, and $25,000 above that. There is an investment of $50,000 mainly for training and reorganizing some of the production layout. The company will be using existing equipment that has already been fully depreciated. The small company has a flat tax rate of 29%. The owner, after reflecting his cost of capital, investment opportunities, and the risks of the project has decided that the Minimum Acceptable Rate of Return (MARR) should be 15%. Below is the base case with no uncertainty