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You are considering a new product launch. The project will cost $ 7 9 0 , 0 0 0 , have a 4 - year
You are considering a new product launch. The project will cost $ have a year life, and have no salvage value; depreciation is straightline to zero. Sales are projected at units per year, price per unit will be $ variable cost per unit will be $ and fixed costs will be $ per year. The required return on the project is percent, and the relevant tax rate is percent.
a
The unit sales, variable cost, and fixed cost projections given above are probably accurate to within pm percent. What are the upper and lower bounds for these projections? What is the basecase NPV What are the bestcase and worstcase scenarios? A negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your NPV answers to decimal places, eg
b
Calculate the sensitivity of your basecase NPV to changes in fixed costs. A negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to decimal places, eg
c
What is the accounting breakeven level of output for this project? Do not round intermediate calculations and round your answer to decimal places, eg
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