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*Please show work if possible You are considering a new product launch. The project will cost $2,200,000, have a 4 -year life, and have no
*Please show work if possible
You are considering a new product launch. The project will cost $2,200,000, have a 4 -year life, and have no salvage value; depreciation is straight-line to 0 . Sales are projected at 150 units per year; price per unit will be $29,000; variable cost per unit will be $17,500; and fixed costs will be $590,000 per year. The required return on the project is 12%, and the relevant tax rate is 34%. a. Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to within 10%. What are the upper and lower bounds for these projections? What is the base-case NPV? What are the best-case and worst-case scenarios? (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round the final NPV answers to 2 decimal places. Omit \$ sign in your response.) b. Evaluate the sensitivity of your base-case NPV to changes in fixed costs. (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round the final answer to 3 decimal places. Omit $ sign in your response.) NPV/FC$ c. What is the cash break-even level of output for this project (ignoring taxes)? (Round the final answers to the nearest whole unit.) Cash break-even units d-1. What is the accounting break-even level of output for this project? (Round the final answers to the nearest whole unit.) Accounting break-even units d-2. What is the degree of operating leverage at the accounting break-even point? (Round the final answer to 4 decimal places.) Degree of operating leverageStep by Step Solution
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