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QUESTION 4 Hickman's Fashions can invest 55 million in a new plant for producing lip gloss. The plant has an expected life of 5 years,
QUESTION 4 Hickman's Fashions can invest 55 million in a new plant for producing lip gloss. The plant has an expected life of 5 years, and expected sales are 6 million sticks per year. Fixed costs are $2 million a year and variable costs are 51 per stick. The product will be priced at $2 per stick. The plant will be depreciated straight line over 5 years to a salvage value of zero. The opportunity cost of capital is 10% and the tax rate is 40 percent. A) What is the base case NPV B) what is the NPV if fixed costs turn out to be 51.5 million per year. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save Al Answers Save and Submit Powered by
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