Question
project will cost $900,000, have a 5-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 290 units per
project will cost $900,000, have a 5-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 290 units per year; price per unit will be $15,895, variable cost per unit will be $11,700, and fixed costs will be $595,000 per year. The required return on the project is 12 percent, and the relevant tax rate is 22 percent. Based on your experience, the unit sales, variable cost, and fixed cost projections given here accurate to within +-10%
A best case and worst case NPV with these projections
Base case NPV
what is the sensitivity of your base case npc to changes in fixed cost
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