Question
- The campany have the following estimates for the project. Price: 2,500 USD per unit Variable Cost: 1,500 USD per unit Fixed Cost: 400,000 USD
- The campany have the following estimates for the project.
| Price: | 2,500 USD per unit |
| Variable Cost: | 1,500 USD per unit |
| Fixed Cost: | 400,000 USD |
| Quantity: | 95,000 units |
- Suppose the campany believe the estimates are accurate only to within +/- 18 %. What value should the campany use for the 3 variables (Quantity, Price and Variable Cost) when it perform its best case senario analysis? What about the worst case senarios? Please fill in the table below.
|
| Base case | Best Case | Worst Case |
| PRICE |
|
|
|
| VARIABLE COST |
|
|
|
| FIXED COST |
|
|
|
| QUANTITY |
|
|
|
- Ignoring the effect of taxes, assume that initial investment is $ 200,000, required return is 10% and life time is 4 years. Calculate the Accounting break-even quantity and Financial break-even quantity for the base case. How can you interpret your result.
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The Little Book Of Market Wizards Lessons From The Greatest Traders
Authors: Jack D. Schwager
1st Edition
1118858697, 978-1118858691
