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(Related to Checkpoint 13.2 and Checkpoint 13.3) (Comprehensive risk analysis) Blinkeria is considering introducing a new line of hand scanners that can be used to
(Related to Checkpoint 13.2 and Checkpoint 13.3) (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 $104 each, and the company analysts performing the analysis expect that the firm can sell 100,000 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 $20 per unit and fixed costs, not including depreciation, are forecast to be $1,070,000 per year. To manufacture this product, Blinkeria will need to buy a computerized production machine for $9.1 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 $308,000 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) 9 percent decrease in the number of units sold. c. Determine the sensitivity of the project's NPV to an) 9 percent decrease in the price per unit. d. Determine the sensitivity of the project's NPV to an) 9 percent increase in the variable cost per unit. e. Determine the sensitivity of the project's NPV to a(n) 9 percent increase in the annual fixed operating costs. f. Use scenario analysis to evaluate the project's NPV under worst- and best-case scenarios for the project's value drivers. The values for the expected or base-case along with the worst- and best-case scenarios are listed here: a. The NPV for the base-case will be $ . (Round to the nearest dollar.) A Data Table $9,100,000 5 years $0 Initial cost of the machine Expected life Salvage value of the machine Working capital requirement Depreciation method Depreciation expense Cash fixed costs-excluding depreciation Variable costs per unit Required rate of return or cost of capital Tax rate Enter your answer in the answer box and then click Check Answer. $308,000 straight line $1,820,000 per year $1,070,000 per year $20 9.1% 34% 6 parts remaining Check
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