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My question is question 6 scenario analysis , but it deals with question 5 , thank you so much for your help ! h. Calculate

My question is question 6 scenario analysis , but it deals with question 5 , thank you so much for your help ! image text in transcribed
image text in transcribed
h. Calculate the base-case cash flow and NPV. What is the sensitivity of NPV to changes in the sales figure? Explain what your answer tells you about a 500-unit decrease in projected sales. What is the sensitivity of OCF to changes in the variable cost figure? Explain what your answer tells you about a $1 decrease in estimated variable costs. Scenario Analysis (LO2] In the previous problem, suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within 10 per- cent. Calculate the best-case and worst-case NPV figures. Calculating Break-Even (LO3] In each of the following cases, calculate the ac- counting break-even and the cash break-even points. Ignore any tax effects in calcu- lating the cash break-even. Unit Price Unit Variable Cost Fixed Costs $2,980 $2,135 $9,000,000 $9.000.000 46 135,000 931,900 Depreciation $3,100,000 183,000 41 930 8. Calculating Break-Even (LO3] In each of the following cases, find the unknown variable: Depreciation Accounting Break-Even 97,432 165,000 19,530 Unit Price $39 Unit Variable Cost $30 Fixed Costs $ 820,000 2,745,000 237,000 27 $1,150,000 138,900 92 9. Calculating Break = $54 per unit; variab = 12 percent; initial taxes, what is the ac The financial break-eve financial break-eve 10. Using Break-Ever accounting break-evo units, life = five year quired return = 12 per kuing Break-Even (LO3] A project has the following estimated data: price tunit; variable costs = $36 per unit: fixed costs $19.300; required return ent; initial investment = $26.800; life = four years. Ignoring the effect of Is the accounting break-even quantity? The cash break-even quantity? break-even quantity? What is the degree of operating leverage at the break-even level of output? Even Analysis ILO3) Consider a project with the following data: eak-even quantity = 14,200 units; cash break-even quantity = 10,300 ve years; fixed costs = $170,000; variable costs = $27 per unit: re- 12 percent. Ignoring the effect of taxes, find the financial break-even quality. 1. Calculating Oper Calculating Operating Leverage (L04 AL 1 If output rises to l of calculate that the degre What will perating Leverage (LO4) At an output level of 53,000 units, you rse of operating leverage is 3.21. If output rises to 57.000 units, line cash flow be? Will the new level of AND PROBLEMS ya Doyo connect ASIC -15) FACE c. (NSI), and 64 per unit, and the va in which total pro on a cash basis? 1. Calculating Costs and Break-Even (LO3] Night Shades, Inc. (NS tures biotech sunglasses. The variable materials cost is $9.64 per un able labor cost is $8.63 per unit. a. What is the variable cost per unit? b. Suppose NSI incurs fixed costs of $915,000 during a year in which tot tion is 215,000 units. What are the total costs for the year? c. If the selling price is $39.99 per unit, does NSI break even on a cash depreciation is $465,000 per year, what is the accounting break-even Computing Average Cost [LO3] K-Too Everwear Corporation can man mountain climbing shoes for $35.85 per pair in variable raw material.com $26.45 per pair in variable labor expense. The shoes sell for $165 per pair. Last production was 145,000 pairs. Fixed costs were $1,750,000. What were total proce tion costs? What is the marginal cost per pair? What is the average cost? If the com pany is considering a one-time order for an extra 5,000 pairs, what is the minimum acceptable total revenue from the order? Explain. Scenario Analysis (LO2) Sloan Transmissions, Inc., has the following estimates for its new gear assembly project: price = $1,700 per unit; variable costs = 5480 per unit: fixed costs = $4.1 million; quantity = 95,000 units. Suppose the company believes all of its estimates are accurate only to within 15 percent. What values should the company use for the four variables given here when it performs its best case scenario analysis? What about the worst-case scenario? 4. Sensitivity Analysis [LO1] For the company in the previous problem, suppose management is most concerned about the impact of its price estimate on the project's profitability. How could you address this concern? Describe how you would calculate your answer. What values would you use for the other forecast variables? Sensitivity Analysis and Break-Even [LO1, 3] We are evaluating a project that costs $864,000, has an eight-year life, and has no salvage value. Assume that de preciation is straight-line to zero over the life of the project. Sales are projected at 71,000 units per year. Price per unit is $49, variable cost per unit is $33, and fixed costs are $765,000 per year. The tax rate is 35 percent, and we require a return of 10 percent on this project a. Calculate the accounting break-even point. What is the degree of operating level age at the accounting break-even point

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