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Nathan Caldwell Welding Company has decided to sell an improved design of gate posts. The posts will sell for $ 7 9 0 per set
Nathan Caldwell Welding Company has decided to sell an improved design of gate posts. The posts will sell for $ per set and have a variable cost of $ per set. The company has spent $ for a marketing study that determined the company will sell sets per year for seven years. The marketing study also determined that the company will lose sales of sets of its highpriced posts. The highpriced posts sell at $ and have variable costs of $ The company will also increase sales of its cheap posts by sets. The cheap posts sell for $ and have variable costs of $ per set. The fixed costs each year will be $ The company has also spent $ on research and development for the new posts. The plant and equipment required will cost $ and will be depreciated on a straightline basis. The new posts will also require an increase in net working capital of $ that will be returned at the end of the project. The tax rate is percent, and the cost of capital is percent.
Suppose you feel that the values are accurate to within only pm percent. What are the bestcase and worstcase NPVsHint: The price and variable costs for the two existing sets of posts are known with certainty; only the sales gained or lost are uncertain.A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to decimal places, eg A Calculate the payback period B Calculate the NPV C Calculate the IRR D Calculate the Best Case NPV E Calculate the Worst case NPV What is the sensitivity of the NPV to the price and quantity of the new posts? fDelta NPVDelta P gDelta NPVDelta Q
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