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EXERCISE The following are the perspectives about a new product to be launched soon: Expected scenario Pessimistic scenario Market size 100,000 70,000 Market share 40%

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EXERCISE The following are the perspectives about a new product to be launched soon: Expected scenario Pessimistic scenario Market size 100,000 70,000 Market share 40% 30% Price 20 17 Unit variable cost 10 15 Fixed costs 11.000 15,000 The time horizon is 20 years. The necessary equipment costs 150,000 euros, to be depreciated in a straight-line basis over 20 years and the residual value is 30,000 euros. The opportunity cost is 6%. All parameters are expected to remain constant during the above 20 years. Tax rate is 30%. a) Perform a sensitivity analysis of unit variable cost. b) Carry out a scenario analysis

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