Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

We are evaluating a project that costs $ 8 4 5 , 0 0 0 , has an eight - year life, and has no

We are evaluating a project that costs $845,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 51,000 units per year. Price per unit is $53, variable cost per unit is $27, and fixed costs are \$950.000 per year. The tax rate is 22 percent, and we require a return of 10 percent on this project. With a break-even point of 40,606. What is the sensitivity NPV to changes in the sales figure? Show your work!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Financial Management

Authors: James C Van Horne

3rd Edition

0133393410, 978-0133393415

More Books

Students also viewed these Finance questions