Question
how do you solve this? 1.Using the table below. Compute the NPV of the Most Likely and Pessimistic scenario, and calculate the % change in
how do you solve this?
1.Using the table below. Compute the NPV of the Most Likely and Pessimistic scenario, and calculate the % change in your NPV from Most Likely to Pessimistic value.
Scenarios
Variable
Pessimistic
Most Likely
Optimistic
Unit price
15.0
18.0
23.0
Annual Unit Sales
100,000.0
135,000.0
160,000.0
Variable Cost per unit
12.0
11.50
10.0
Investment Fixed Cost
400,000.0
350,000.0
250,000.0
Investment Working Capital
50,000.0
42,000.0
35,000.0
Project Life (Years)
8.0
8.0
8.0
Depreciation (straight-line)
46,000.0
43,000.0
31,000.0
Asset Re-sale Price (Salvage Value)
30,000.0
35,000.0
38,000.0
Tax Rate
35.0%
32.0%
30.0%
Required Rate of Return
13%
12%
11%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Survey Of Accounting
Authors: Carl S. Warren, Amanda Farmer
9th Edition
0357132599, 978-0357132593
