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Company KLM can invest $5 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and
Company KLM can invest $5 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and expected sales are 7 million jars of makeup a year. Fixed costs are $2 million a year, and variable costs are $2 per jar. The product will be priced at $4 per jar. The plant will be depreciated straight-line over 5 years to a salvage value of zero. The opportunity cost of capital is 12 percent, and the tax rate is 40 percent. a. What is project NPV under these base-case assumptions? b. What is NPV if variable costs turn out to be $2.20 per jar? c. What is NPV if fixed costs turn out to be $1.5 million per year? d. At what price per jar would project NPV equal zero? Cevap Sorunun cevabn buraya giriniz
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