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(This question has three parts.) The following image illustrates how the Net Present Value of a project, specifically the HomeNet example worked through in our
(This question has three parts.) The following image illustrates how the Net Present Value of a project, specifically the HomeNet example worked through in our lecture material, varies as a single underlying assumption is changed. Units Sold (000s per year) 35 50 65 Sale Price Is per unit) 240 260 280 Cost of Goods ($ per unit) Question A: This type of analysis is known as: O A. Incremental Earnings Forecast O B. EBIT Break-Even Analysis O c. Sensitivily Analysis OD. Scenario Analysis O E. Accelerated Depreciation Analysis Question : Based on our in-class discussion, as a result of the outcome of this analysis (from part A), which single underlying assumption deserves the most scrutiny both during the estimation process, and during the management of the project after it starts? O A. Number of Units Sold OB. Cost of Goods Sold OC. Sale Price OD. Cost of Capital O E. Net Working Capital Question C Question B: Based on our in-class discussion, as a result of the outcome of this analysis (from part A), which single underlying assumption deserves the most scrutiny both during the estimation process, and during the management of the project after it starts? A. Number of Units Sold B. Cost of Goods Sold C. Sale Price D. Cost of Capital E. Net Working Capital Question C: What is your best estimate of the NPV break-even level of number of units sold? (choose the most appropriate answer) A. 40,000 units per year B. 50,000 units per year C. 25,000 units per year D. 35,000 units per year O E. 57,000 units per year
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