Solution-Calculate the sensitivity of this npv to the

Calculate the sensitivity of this npv to the changes

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Reference no: EM132499682

Bing plc is evaluating the purchase of a machine and has the following information:

Initial investment £350,000

Residual value Nil

Expected life 10 Years

Sales volume 20000 Units per year

Sales price £8.50 per unit

Variable cost £3.50 per unit

Fixed costs £24,875 per year

Cost of capital 15 per cent

Required:

Question 1: Calculate the NPV of the project.

Question 2: Calculate the sensitivity of this NPV to the changes in the following project variables. (Show changes that produce a zero NPV in both absolute and percentage terms to 2 decimal places)

Initial Investment

Selling Price

Variable Costs

Sales Volume

Project Discount Rate (approximate)

Question 3: Discuss any four factors that managers should consider when setting the dividend policy and pay-outs for their firm.

Question 4: Explain whether differing patterns of dividend pay-out have an effect on shareholder wealth. Relate your answer to relevant theory.

Reference no: EM132499682

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Calculate the sensitivity of this npv to the changes

Reference no: EM132499682

Reference no: EM132499682

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