Question
The Adept Co. is analyzing a proposed project. The company expects to sell 2,500 units, give or take 10 percent. The expected variable cost per
The Adept Co. is analyzing a proposed project. The company expects to sell 2,500 units, give or take 10 percent. The expected variable cost per unit is $8 and the expected fixed costs are $11,500. Cost estimates are considered accurate within a plus or minus 5 percent range. The depreciation expense is $4,000. The sale price is estimated at $16 a unit, give or take 2 percent. The company bases their sensitivity analysis on the base case scenario.
The company is conducting a sensitivity analysis on the sales price using a sales price estimate of $17. Using this value, what is the earnings before interest and taxes ?
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