Determining the effect on project npv

Assignment Help Business Management
Reference no: EM131026096

A project currently generates sales of $12 million, variable costs equal to 60% of sales, and fixed costs of $2 million. The firm's tax rate is 50%. The project will last for 10 years. The discount rate is 12%.

a-1. What is the effect on project NPV, if sales increase from $12 million to $12.8 million? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)

a-2. What is the effect on project NPV, if variable costs increase to 70% of sales? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places. Enter your answer as the absolute value of the change.)

b. If project NPV under the base-case scenario is $2 million, how much can fixed costs increase before NPV turns negative? (Do not round intermediate calculations. Enter your answer in dollars not in millions. Round you answer to the nearest dollar amount.)

c. How much can fixed costs increase before accounting profits turn negative? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

Reference no: EM131026096

Questions Cloud

Calculating the casualty of a down economy : In 2007, Lehman Brothers Holdings, Inc. became a casualty of a down economy by declaring bankruptcy. The federal government of the United States offered no intervention and permitted the company to fail. In 2008, however, the federal government in..
Prepare the loan amortization schedule : You borrows $10,000,to be repaid in 3 equal payments at the end of each years. The interest rate the bank charges is i = 12%. Prepare the loan amortization schedule.(Please show process)
Determine the flux density in the air gap : Consider the two-pole motor shown in Figure 16.10 on page 778. The gap between the rotor and stator is 1.5 mm. Each of the two field coils has 250 turns and carries a current of 3 A. Assume that the permeability of the iron is infinite. Determine ..
How would one use the sociological imagination : How would one use the sociological imagination to analyze the issue of prisoners as victims? After reading the results of this survey what are some question researchers might have that would lead to further studies on this topic?
Determining the effect on project npv : What is the effect on project NPV, if sales increase from $12 million to $12.8 million? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)
What residual value must the lessor recover to break even : Suppose the risk-free interest rate is 6.3% APR with monthly compounding. If a $1.9 million MRI machine can be leased for seven years for $24,000 per month, what residual value must the lessor recover to break even in a perfect market with no risk?
What role do stereotypes play in criminalizing puerto ricans : What role do stereotypes and prejudices play in criminalizing Puerto Ricans? Please provide at least two examples. How does the theory of assimilation apply to Cuban Americans?
How many armature conductors be placed in series in machine : The radius of the rotor (and thus, the torque arm for the armature conductors) is 0.1 m. The lengths of the armature conductors are 0.3m. Approximately how many armature conductors must be placed in series in this machine?
How many of each type of seat are there on the plane : An airplane has a total of 152 seats. The number of coach-class seats is 5 more than six times the number of first-class seats. How many of each type of seat are there on the plane?

Reviews

Write a Review

Business Management Questions & Answers

  Large out-group of subordinates

What might be some of the consequences of a leader having a relatively small in-group and a large out-group of subordinates?

  Employee handbookneed help in preparing a 8 slide power

employee handbookneed help in preparing a 8 slide power point with speaker notes. develop a presentation to discuss the

  Different levels of profitability at different points

Provide a well-organized and persuasive argument supporting 1 of these two arguments that is most relevant to a global manager.

  Illustrate what are three basic functions of an organization

Illustrate what are the three basic functions of an organization? Do all organizations/organizations (Private, Government, Not-for-profit) perform these three functions?

  How should rsps attract

How should RSPS attract

  Explain how those assessed strategies could be improved

Develop a two- to three-page paper in the correct APA writing style and synthesize your concept of explain how those assessed strategies could be improved and impact the successful marketing of the product?

  Investigate philanthropic projects at high-profile companies

He wants you to investigate the philanthropic projects at 20 high-profile companies of your choice. Visit their Web sites and study programs such as volunteerism, cause-related marketing, matching funds, charitable donations, and so forth.

  Integrated approach to manufacturing chrysler jeep

How has the highly integrated approach to manufacturing Chrysler's Jeep Wrangler in Toledo affected investments made by the focal firm and its suppliers?

  Forecasting explained in this answerthe manager of a small

forecasting explained in this answerthe manager of a small health clinic would like to use exponential smoothing to

  How attractive is the pc industry

1. How attractive is the PC industry? Conduct an industry analysis on the PC industry (A) in its early stages, and (B) in its later stages. Comment on how the industry has evolved.

  Domestic companies can lose their comparative advantage

(TCO 3) One disadvantage of free trade is _____. Domestic companies can lose their comparative advantage uninterrupted flow of capital provides for lower interest rates workers will be given across-the-board pay increases a company's productivity gro..

  Deliberate the issues of henry''s case

Henry is considering suing the company to force it to live up to its agreement. Deliberate the issues as well as likely resolution of Henry's case

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