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Consider a 5-year project with an initial fixed asset investment of $324,000, straight-line depreciation to zero over the project's life, a zero salvage value, a
Consider a 5-year project with an initial fixed asset investment of $324,000, straight-line depreciation to zero over the project's life, a zero salvage value, a selling price of $34, variable costs of $17, fixed costs of $189,700, a sales quantity of 94,000 units, and a tax rate of 21 percent. What is the sensitivity of NPV to changes in the sales price and fixed costs? Draw NPV lines. (Assume a required rate of return or 11 percent) Unit sales: Price per unit: Variable costs per unit: Fixed costs per year: Base Case Income Statement Sales Variable costs Fixed costs Depreciation EBIT Tax Net income
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