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Calculate the project npv based on a 5 year life

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Reference no: EM132842776

Robo Cash is considering introducing a new line of higher end produces. Below are the company's forecast of financial data for the new products.

Price per unit: $15

Quantity: 300,000

Variable Cost per unit: $8

Fixed Cost: $1,750,000

CCA Rate: 20%

Capital Investment:$3,750,000

WACC: 13.6%

Calculate the project's NPV based on a 5 year life, using straight-line CCA (ignore the half year rule).

a. How sensitive is NPV to a 4% reduction in price?

b. How sensitive is NPV to a 6% reduction is quantity?

c. And how sensitive is NPV to a 5% increase in variable costs?

Reference no: EM132842776

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