Prepare a table which indicate the upper and lower bounds

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Reference no: EM132936515

Primier Baking and Cooking Technology is a manufacturer producing baking and cooking utensils such as stand mixer, food processor, oven, pastry blender, electric deep fryer and other cooking utensils. It is located at Alor Setar and been established since 1990. Based on recent development during festival season, the company would like to take up new project in increasing the production due to high demand. This project is estimated to costs RM700,000 with life span of five year and has no salvage value. This project has a depreciation using straight-line to zero. The required return is 12 percent and the tax rate is 35 percent. Sales are projected at 700 units per year. Price per unit is RM2,300, variable cost per unit is RM1,250 and fixed costs are RM180,000 per year. No net working capital is required. Suppose you think the unit sales, price, variable cost and fixed cost projection are accurate to within 5 percent.

You are required to:

Problem (a) Prepare a table which indicate the upper and lower bounds for these projections.

Problem (b) Compute the base-case net present value [NPV].

Problem (c) Determine the best and worst-case scenario net present values [NPV's]

Reference no: EM132936515

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