You are evaluating the HomeNet project under the following assumptions: new tax laws allow 100% bonus depreciaton (all the depreciation expense, $7.5 milion, occurs when the assst is pet inte use, in this case immediately). Research and dovolopment oxponditures total $15 million in year 0 and seling. general, and administrative expenses are $2.8 milion per year (assuming thern is no cannibalzation). Also assume HomeNet will have no incremental cash or imvertory requirements (products will be shipped directy from the contract manudacturer to oustomers). Howevor, receivables related to HomeNet are expectind to aocount for 15% of annual sales, and payables ase expected to bo 15% of the annual cost of goods sold, Under these assumpoons asd assuming a cost of capitat of 12\%, calculate the foliowing: a. The break-even annual sales price decline if; sales of 50,000 units in year 1 increase by 51,000 units per year over the Me of the project, the year 1 sales price is $200 ine end the year 1 cost of $120 tunit decreases by 21% annualy, see b. The break-oven annual unit sales increase it sales are 50,000 units in year 1 , tho year 1 salos price of $260 unit, docreases by 124, annually and the year 1 cost of $120 int decreases by 21% annually. See a. The break-even annual sales price decline if: sales of 50,000 units in year 1 increase by 51,000 units per year over the Me of the projoct the year 1 sales price is 5260 unit, and ne year 1 cost of 5120 unit decreases by 21% annuaiy. See The break-oven annuat saies price decline is 15. (Round to two decinal places) You are evaluating the HomeNet project under the following assumptions: new tax laws allow 100% bonus depreciaton (all the depreciation expense, $7.5 milion, occurs when the assst is pet inte use, in this case immediately). Research and dovolopment oxponditures total $15 million in year 0 and seling. general, and administrative expenses are $2.8 milion per year (assuming thern is no cannibalzation). Also assume HomeNet will have no incremental cash or imvertory requirements (products will be shipped directy from the contract manudacturer to oustomers). Howevor, receivables related to HomeNet are expectind to aocount for 15% of annual sales, and payables ase expected to bo 15% of the annual cost of goods sold, Under these assumpoons asd assuming a cost of capitat of 12\%, calculate the foliowing: a. The break-even annual sales price decline if; sales of 50,000 units in year 1 increase by 51,000 units per year over the Me of the project, the year 1 sales price is $200 ine end the year 1 cost of $120 tunit decreases by 21% annualy, see b. The break-oven annual unit sales increase it sales are 50,000 units in year 1 , tho year 1 salos price of $260 unit, docreases by 124, annually and the year 1 cost of $120 int decreases by 21% annually. See a. The break-even annual sales price decline if: sales of 50,000 units in year 1 increase by 51,000 units per year over the Me of the projoct the year 1 sales price is 5260 unit, and ne year 1 cost of 5120 unit decreases by 21% annuaiy. See The break-oven annuat saies price decline is 15. (Round to two decinal places)
