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( Related to Checkpoint 1 3 . 2 and Checkpoint 1 3 . 3 ) ( Comprehensive risk analysis ) Blinkeria is considering introducing a
Related to Checkpoint and Checkpoint Comprehensive risk analysis Blinkeria is considering introducing a new line of hand scanners that can be used to copy material and then download it into a personal computer. These scanners are expected to sell for an average price of $ each, and the company analysts performing the analysis expect that the firm can sell units per year at this price for a period of five years, after which time they expect demand for the product to end as a result of new technology. In addition, variable costs are expected to be $ per unit and fixed costs, not including depreciation, are forecast to be $ per year. To manufacture this product, Blinkeria will need to buy a computerized production machine for $ million that has no residual or salvage value, and will have an expected life of five years. In addition, the firm expects it will have to invest an additional $ in working capital to support the new business. Other pertinent information concerning the business venture is provided here:
a Calculate the project's NPV
b Determine the sensitivity of the project's NPV to an percent decrease in the number of units sold.
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