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e . Calculate the after tax salvage cash flow.f . Calculate the net cash flows for each year. Based on these cash flows, what are
e Calculate the aftertax salvage cash flow.f Calculate the net cash flows for each year. Based on these cash flows, what are the projects NPV IRR, MIRR, PI payback, and discounted payback? Do these indicators suggest that the project should be undertaken?g Perform a sensitivity analysis on the unit sales, salvage value, and cost of capital for the project. Assume each of these variables can vary from its basecase or expected, value by and Include a sensitivity diagram, and discuss the results.h Assume that Tashay Wilcox is confident in her estimates of all the variables that affect the projects cash flows except unit sales and sales price. If product acceptance is poor, unit sales would be only units a year and the unit price would only be $; a strong consumer response would produce sales of units and a unit price of $ Johnson believes there is a chance of poor acceptance, a chance of excellent acceptance, and a chance of average acceptance the base case What is the worstcase NPV The bestcase NPV Use the worst base and bestcase NPVs and probabilities of occurrence to find the projects expected NPV as well as the NPVs standard deviation and coefficient of variation.i Assume the firms average project has a coefficient of variation in the range of to Would the new line be classified as high risk, average risk, or low risk? What type of risk is being measured here? M&M typically adds or subtracts percent age points to the overall cost of capital to adjust for risk. Should the new line be accepted? Are there any subjective risk factors that should be considered before the final decision is made?
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