Calculate the slope of the sensitivity graph

Reference no: EM132017828

Question: A new technological line to produce shoes is being designed. It costs $100,000, and operating costs are expected to be $30,000 per year. Planned annual production is 800 pairs, and the price of a pair of shoes is $80. The line's service life is five years; the depreciation rate is 20%. Assuming a 10% annual interest rate, perform sensitivity analysis with respect to the operating costs in the interval [-20%, +20%) in terms of the present worth and plot sensitivity graph. Calculate the slope of the sensitivity graph and comment briefly.

Reference no: EM132017828

Questions Cloud

Develop custom software solutions for the companies : ABC Consulting Inc. is a software development company that develops custom software solutions for other companies.

What is the present value of the interest tax shield : Newborn Nursery has 12,000 bonds outstanding with a face value of $1,000 each. The coupon rate is 6.9 percent and the tax rate is 34 percent.

What is yield to maturity and effective rate of return : What is the yield to maturity that an investor can expect to earn on these bonds?

Prepare the journal entry to record the disposition : Cheney Company sold a 20-ton mechanical draw press for $60,000. Prepare the journal entry to record the disposition

Calculate the slope of the sensitivity graph : A new technological line to produce shoes is being designed. It costs $100,000, and operating costs are expected to be $30,000 per year.

Determine how much money will be in the account : For the next 9 years, you decide to place $568 in equal year-end deposits into a savings account earning 4.52 percent per year.

Capital structures-all-equity plan and levered plan : Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II).

What will be an investor taxable income from the bond : What will be an investor's taxable income from the bond over the coming year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Increases in debt affect weighted average cost of capital : How do increases in debt affect the weighted average cost of capital?

User Account

All Pages