Calculate equivalent annual cost for the project

Assignment Help Financial Management

Reference no: EM133674338

Question

Tom is evaluating a project that costs $3,500,000, ?has a five-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 125,000 ?units per year, price per unit is $65, ?variable cost per unit is $40, ?and fixed costs are $2 ?million per year. The tax rate is 21%, ?and the required rate of return on the project is 10%.

Calculate the equivalent annual cost for the project.

Calculate the financial break-even number of units for the project

Suppose the price, units, VC per unit, and FC projections are accurate within +/- 10%. ? Calculate the best case NPV.

Suppose the price, units, VC per unit, and FC projections are accurate within +/- 10%. ? Calculate the worst-case NPV.

Reference no: EM133674338

Questions Cloud

How do changes in credit ratings affect bond valuation : What is the formula for calculating the present value of a bond? How do changes in credit ratings affect a bond's valuation?

What are the primary factors that should be considered : What is the relationship between risk and return? What are the primary factors that should be considered when establishing a firm's capital structure?

Portfolio management process : Follow the steps of a basic Portfolio Management Process and write mom a two-page letter with your recommendations of what she do.

Spot foreign exchange market is in equilibrium : Analyze whether or not the spot foreign exchange market is in equilibrium?

Calculate equivalent annual cost for the project : Calculate the equivalent annual cost for the project. Calculate the financial break-even number of units for the project

What would the dividend yield as a percentage today : Discuss and calculate the cost of new common stock. What would the dividend yield as a percentage today and a year from now if the dividend growth rate is 12%?

Compute the present value of all cash flows : Compute the present value of all the cash flows. Compute the future value of all the cash flows as of the end of year 10.

What is finance and how does it relate to accounting : What is finance? How does it relate to accounting? What is the objective(s) of the financial function of the firm?

What is the estimated vehicle value at the end of the loan : Felix is considering the purchase of a Porsche Boxster and has negotiated a final price of $48,100. What is the estimated vehicle value at the end of the loan?

User Account

All Pages