Projections given for price-quantity and variable costs

Assignment Help Financial Management

Reference no: EM13941651

We are evaluating a project that costs $1059720, has a seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 40776 units per year. Price per unit is $51, variable cost per unit is $24, and fixed costs are $834508 per year. The tax rate is 31 percent, and we require a 10 percent return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/-9 percent. What is the NPV of the project in worst-case scenario?

Reference no: EM13941651

Questions Cloud

Discuss benefits to customers and companies : Define direct marketing and discuss its benefits to customers and companies. Identify and discuss the major forms of direct marketing. Discuss how companies go about conducting online marketing to profitably deliver more value to customers.

Performance management at network solutions : For this discussion, read Case Study 1-2: Performance Management at Network Solutions, Inc. What do you think will be some of the advantages or positive outcomes resulting from the implementation of the system

Calculate sensitivity of OCF to changes in quantity sold : Consider a four-year project with the following information: initial fixed asset investment = $487063; straight-line depreciation to zero over the four-year life; zero salvage value; price = $34; variable costs = $22; fixed costs = $198018; quantity ..

What is the manufacturer markup percentage : What is the manufacturer's markup percentage? _______________________, What is the retailer's markup in dollars?______________________________.

Projections given for price-quantity and variable costs : We are evaluating a project that costs $1059720, has a seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 40776 units per year. What is the NPV of the proj..

Differences between the company product : Identify the key competitor products (top 2 or 3) and describe the differences between the company's product(s) and their closest competitor's products.

Discuss the message execution : Discuss the message execution (slice of life, lifestyle, fantasy, mood/image, musical, personality, technical expertise, scientific evidence, testimonial/endorsement)

This applet program needs an html file to run. : This applet program needs an html file to run. You should supply the file along with the program so that the reader can test it.

Effectively manage work related stressors : A manager's job is varied and hectic and managers will often find themselves under much job-related stress. (Hitt, Black and Porter, 2008) Evaluate critically the strategies that 21st Century businesses could use to effectively manage work related s..

User Account

All Pages