Reference no: EM132086155
Question: Whimsical Corporation is an international manufacturer of fragrances for women. Management at Whimsical is considering expanding the product line to? men's fragrances.
From the best estimates of the marketing and production? managers, annual sales (all for cash) for this new line are 1,500,000units at $60 per unit; cash variable cost is $20 per unit; and cash fixed costs are $18,000,000 per year. The investment project requires $30,000,000 of cash outflow and has a project life of 9 years. At the end of the 9-yearuseful life, there will be no terminal disposal value. Assume all cash flows occur at year-end except for initial investment amounts. Men's fragrance is a new market for Whimsical, and management is concerned about the reliability of the estimates. The controller has proposed applying sensitivity analysis to selected factors. Ignore income taxes in your computations. Whimsical's required rate of return on this project is 12 %.
Future and present value tables needed for this problem.
1. Calculate the net present value of this investment proposal.
2. Calculate the effect on the net present value of the following two changes in assumptions. (Treat each item independently of the? other.)
a. 15% reduction in the selling price
b 15% increase in the variable cost per unit
|
What is the cash flow from the project
: The Wet Corp. has an investment project that will reduce expenses by $25,000 per year for 3 years. The project's cost is $25,000.
|
|
Critical to manage for success in elastic enterprise
: What is an example of a control system that would be critical to manage for success in elastic enterprise? Why?
|
|
What is the estimated bad debt expense for the current year
: Wheeling Inc. uses the aging of accounts receivable method. Its estimate of uncollectible receivables resulting from the aging analysis equals $6,200.
|
|
Example of lose-lose negotiation and win-win negotiation
: Which of the following is an example of win-win negotiation? Which of the following is an example of lose-lose negotiation?
|
|
Calculate the net present value of investment proposal
: From the best estimates of the marketing and production? managers, annual sales (all for cash) for this new line are 1,500,000units at $60 per unit.
|
|
Consider single-line-single-server waiting line system
: Consider a single-line, single-server waiting line system. What is the probability of having 3 or more units in the system?
|
|
How has your understanding of popular culture changed
: How has your understanding of popular culture changed since taking this course? Explain. How will popular culture change in the future? Explain.
|
|
Post to the stockholders equity accounts
: Whispering Winds Corp. is authorized to issue both preferred and common stock. The par value of the preferred is $50. During the first year of operations.
|
|
Nonprofit organization headquartered in minneapolis
: Over past four years, the LSS organization, a nonprofit organization headquartered in Minneapolis, MN, has become renowned nationally for its Camp Noah project
|