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Ragu's Company estimates that their products can be sold for an average price of $ 5 0 per unit, and the company analysts expect that
Ragu's Company estimates that their products can be sold for an average price of $ per unit, and the company analysts expect that the firm can sell units per year at this price for a period of five years. Ragu's companys management has determined that it will be possible to reduce the variable cost per unit down to $ per unit by purchasing an additional option for the equipment that will raise its initial cost to $ million the residual or salvage value for this configuration is estimated to be $ The cash fixed cost per year is $ In addition, the firm expects to have to invest an additional $ in working capital to support the new business. The tax rate is and the discount rate is
Calculate NPV and IRR for the above scenario using MS Excel
consider the following changes:
Unit sales
Price per unit
Variable cost per unit
Cash fixed costs per year
For the above changes, analyze the sensitivity of the project NPV using MS Excel.
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