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oblem 1 0 - 8 Sensitivity Analysis ( LO 3 ) peror's Clothes Fashions can invest $ 6 million in a new plant for producing
oblem Sensitivity Analysis LO
peror's Clothes Fashions can invest $ million in a new plant for producing invisible makeup. The plant has an expected life of ars, and expected sales are million jars of makeup a year. Fixed costs are $ million a year, and variable costs are $ per jar. e product will be priced at $ per jar. The plant will be depreciated straightline over years to a salvage value of zero. The portunity cost of capital is and the tax rate is
a What is project NPV under these basecase assumptions?
Note: Do not round intermediate calculations. Enter your answer in millions, rounded to decimal places.
b What is NPV if variable costs turn out to be $ per jar?
Note: Do not round intermediate calculations. Enter your answer in millions, rounded to decimal places.
c What is NPV if fixed costs turn out to be $ million per year?
Note: Do not round intermediate calculations. Enter your answer in millions, rounded to decimal places.
d At what price per jar would the project's NPV equal zero?
Note: Enter your answer in dollars, not in millions. Do not round intermediate calculations. Round your answer to decimal places.
tablea NPVb NPVc NPVd Price,
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