Calculate the sensitivity of your initial npv to changes

Assignment Help Microeconomics
Reference no: EM131532951

Assignment

You are considering a new product. The project will cost $960,000, have a four-year life, and a salvage value of $60,000; depreciation is straight-line to zero book value. Sales are projected at 240 units per year; price per unit will be $25,000; variable cost per unit will be $19,500; and fixed costs will be $830,000 per year. The cost of capital is 15%, and the tax rate is 35%. What is the initial NPV? Calculate the sensitivity of your initial NPV to changes in the fixed costs. You believe the fixed costs could be as low as 800,000 or as high as 860,000.

Reference no: EM131532951

Questions Cloud

What factors are causing so many banks to close : What factors are causing so many banks to close? Banks can operate without having so many branches spread throughout the US.
Examination of common substances of abuse : Examination of common substances of abuse and their properties and effects on the body, as well as their processes of addiction.
Calculate the annual fuel savings in gallons for the truck : Calculate the annual fuel savings in gallons for the truck and car assuming both vehicles are driven 8,000 miles per year.
Explain how a business can earn a positive gross profit : In comparing the accounts of a merchandising company with those of a service company, what additional accounts would the merchandising company likely use.
Calculate the sensitivity of your initial npv to changes : Calculate the sensitivity of your initial NPV to changes in the fixed costs. You believe the fixed costs could be as low as 800,000 or as high as 860,000.
How have non-us manufacturers responded : How have non-US manufacturers responded? Summarize effects and discuss trends of the past 35 years. Support your findings with additional academic references.
Distinguish between cash discounts and trade discounts : How does a company that uses a perpetual inventory system determine the amount of inventory shrinkage?
What entry does the recipient record : Does the sender (maker) of a debit memorandum record a debit or a credit in the recipient's account? What entry (debit or credit) does the recipient record?
Create a service blueprint of the procedure : Create a service blueprint of the procedure and identify opportunities for improvement. Compute the process capability ratio and process capability index.

Reviews

Write a Review

Microeconomics Questions & Answers

  Explain the concept of equalizing differences in wages

Explain the concept of "equalizing differences" in wages. It has been recently argued that the University of Iowa can't attract or retain good faculty by offering higher salaries, because anyone who is attracted by high salaries will go to work in ..

  A random walk down on wall street

What are some of the tricks and pitfalls an investor should avoid as discussed in the book " A Random Walk Down on Wall Street"? Explain.

  Taking off from an aircraft carrier is a non-trivial

taking off from an aircraft carrier is a non-trivial operation. basically theres not enough room for the jet to taxi

  Explain apparent relationship between entering gpas and

ten students in a graduate program were randomly selected.nbsp their grade point averages gpas when they entered the

  Market-oriented tradition associated with adam smith

How does the market-oriented tradition associated with Adam Smith differ from the active government tradition advocated by Alexander Hamilton?

  Optimal tax-government officials

Suppose government officials have set an emissions tax to reduce pollution. Assume the optimal tax would be $1,500 but government officials have set the tax equal to $500. At the equilibrium with the $500 tax:

  The relationship between the revenue and the quantity

To complete the analysis, Chuck wants to know more about the revenue that he can generate from his farm. The price of corn depends on how much Chuck produces.

  What steps can a country take to change its institutions

What role can governments play in improving the steady state? What does this imply about the relationship between the size of government and GDP per capita?

  What will profit or loss be per unit

What will be the equilibrium price? What will be the equilibrium output for the industry? For each firm? What will profit or loss be per unit? Per firm? Will this industry expand or contract in the long run?

  What are the economic implications of action

Assume that the government imposed a price ceiling on gasoline in order to prevent prices from getting too high. What are the economic implications of action in the gasoline markets? Use graphs as needed and explain your answers thoroughly.

  What is the value of consumer expenditure on smart phones

Given this information, what is the equilibrium price and equilibrium quantity of smart phones in this market?  What is the value of consumer expenditure on smart phones given this initial information? What is the value of consumer surplus in the mar..

  Gaither entered into a contract with a nonprofit corporation

Gaither entered into a contract with a nonprofit corporation whereby Gaither would receive $700 per month while in medical school, provided that he would return to his small hometown, Chester, to practice medicine for ten years after becoming a licen..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd