Reference no: EM133114754
We are evaluating a project that costs $832,000, 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 40,000 units per year. Price per unit is $40, variable cost per unit is $15, and fixed costs are $700,000 per year. The tax rate is 35 percent, and we require a return of 18 percent on this project.
a. Calculate the accounting break-even point. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
Break-even point units
b-1 Calculate the base-case cash flow and NPV. (Do not round intermediate calculations and round your NPV answer to 2 decimal places, e.g., 32.16.)
Cash flow $
NPV $
b-2 What is the sensitivity of NPV to changes in the sales figure? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
ΔNPV/ΔQ $
c. What is the sensitivity of OCF to changes in the variable cost figure? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)
|
Journalize the entries to close income summary
: The beginning Capital balances for the year were P900,000 for Laguna and P1,300,000 for Cadelina. Journalize the entries to close income summary
|
|
What is the BEST estimate for market value of sandman equity
: In 2005, Sandman investors purchased a shopping mall for $3.7 million. What is the BEST estimate for the market value of sandman's equity
|
|
EDU-354-promote brain development
: EDU-354-What are three ways to promote brain development in toddlerhood and early childhood?
|
|
Different types of motor policies
: Mio Striker has a 2007 Ford Falcon valued at $5000. She asks your advice as to which motor vehicle insurance cover she should have. Discuss the cover provided b
|
|
Calculate the accounting break-even point
: We are evaluating a project that costs $832,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the li
|
|
What is the weighted average cost of capital
: Doug's lights have 30,000 shares of common stock outstanding at a market price of $15 a share. This stock was originally issued at $31 per share. The firm also
|
|
Compute bcva from perspective of financial institution
: A risk manager at a financial institution needs a quick calculation of the BCVA on a swap. Assume EPE = 5%, ENE = -3%, counterparty credit spread = 300bps, the
|
|
How can markets prevent market manipulation
: In reference to financial markets. How can markets prevent market manipulation?
|
|
Option contracts and forward contracts for foreign currency
: What are the differences between foreign currency option contracts and forward contracts for foreign currency?
|