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Emperor’s Clothes Fashions can invest $6 million in a new plant for producing invisible makeup. The plant has an expected life of 5 years, and expected sales are 7 million jars of makeup a year. Fixed costs are $2.6 million a year, and variable costs are $1.40 per jar. The product will be priced at $2.70 per jar. The plant will be depreciated straight-line over 5 years to a salvage value of zero. The opportunity cost of capital is 12%, and the tax rate is 30%.
a. What is project NPV under these base-case assumptions? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
b. What is NPV if variable costs turn out to be $1.60 per jar? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
c. What is NPV if fixed costs turn out to be $2.4 million per year? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
d. At what price per jar would project NPV equal zero? (Enter your answer in dollars not in millions. Do not round intermediate calculations. Round your answer to 2 decimal places.)
A medical college of Virginia located in the urban city of Richmond, Virginia has a wage of 1.8579. a student from nearby Virginia Commonwealth university has just been treated for viral meningitis during a 5 day length of stay (LOS) DRG weight: 1.53..
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A project that costs $3,600 to install will provide annual cash flows of $860 for each of the next 6 years. A. Calculate the NPV if the discount rate is 10%? NPV = $. B. Is this project worth pursuing? Yes/No C. How high can the discount rate be befo..
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