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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

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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 copy material and then download it into a personal computer. These scanners are expected to sell for an average price of $100 each, and the company analysts performing the analysis expect that the firm can sell 102,000 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 $21 per unit and fixed costs. not including depreciation, are forecast to be $1,020,000 per year. To manufacture this product, Blinkeria will need to buy a computerized production machine for $10.7 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 $305.000 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 a(n) 12 percent decrease in the number of units sold c. Determine the sensitivity of the project's NPV to a(n) 12 percent decrease in the price per unit. Datamine the enneth of thrinete NOW ainarenting in the mishin ne naran a. The NPV for the base case will be s 1 (Round to the nearest dollar) the product to end as a result of new technology. In addition, variable costs are expected to be $21 per unit and fixed costs not including depreciation, are forecast to be $1,020,000 per year. To manufacture this product, Blinkeria will need to buy a computerized production machine for $10.7 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 $305,000 in working capital to support the new business. Other pertinent information concerning the business venture is provided here. E a. Calculate the project's NPV b. Determine the sensitivity of the project's NPV to a(n) 12 percent decrease in the Lumber of units sold c. Determine the sensitivity of the project's NPV to a[n) 12 percent decrease in the price per unit d. Determine the sensitivity of the project's NPV to a[n) 12 percent increase in the variable cost per unit e. Determine the sensitivity of the project's NPV to a[n) 12 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 $1 (Round to the nearest dollar) Have an expected edition, the firm expects it will have to invest an additional $305,000 in working capital to support the ne pertinent information concerning the business venture is provided here: project's NPV he sensitivity of the project's NPV to a(n) 12 percent decrease in the number of units sold me sensitivity of the project's NPV to a[n) 12 percent decrease in the price per unit. he sensitivity of the project's NPV to a(n) 12 percent increase in the variable cost per unit. the sensitivity of the noct's NPV to ani 12. percontinctoase in the annual fixed.cnerating costs Data Table - 10 th alue drive - Toril 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 $10,700,000 5 years SO $305,000 straight line $2,140,000 per year $1.020,000 per year $21 9.196 34% Print Done ur answd 5 aining Clear All Check Answer o Type here to search RI contancoase in the annual fixed onerating costs i Data Table Best Case Unit sales Price per unit Variable cost per unit Cash fixed costs per year Depreciation expense Expected or Base Case 102 000 $100 $(21) $(1,020,000) $(2,140,000) Worst Case 72,420 $90.00 $(23.31) $(1,213 800) S(2,140,000) 131,580 $118.00 $(1911) $(907 800) $(2,140,000) Print Done

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