What is the NPV of the worst case scenario

Assignment Help Financial Management

Reference no: EM131010118

You are considering a new product launch. The project will cost $925,000, have a six-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected to be $1,800,000; variable cost per unit will be 60% of sales; and fixed costs will be $610,000 per year. The required return on the project is 15 percent, and the relevant tax rate is 35 percent. The unit sales, variable cost, and fixed cost projections given above are probably accurate to within ±10 percent. What is the NPV of the worst case scenario? What is the sensitivity of NPV to one dollar changes in variable cost? If the Standard Deviation of Revenue is 1,000,000, what is the standard deviation of NPV?

Reference no: EM131010118

Questions Cloud

What are their implications for society : How would you evaluate these two contrasting views, and what are their implications for society?

Specializes in high-end bicycles : You are pondering starting a company that specializes in high-end bicycles. Your initial investment would be $500,000 for depreciable equipment, which should last 5 years, and your tax rate would be 40%. You could sell a bike for $10,000, assuming yo..

Describe the population and sample for this problem : The supervisors of a rural county are interested in the proportion of property owners who support the construction of a sewer system. Because it is too costly to contact all 7000 property owners, a survey of 500 owners (selected at random) is unde..

Explanation of gcc differ from those in the ipat model : Question: How do the causal factors considered in the social constructionist explanation of GCC differ from those in the IPAT model

What is the NPV of the worst case scenario : You are considering a new product launch. The project will cost $925,000, have a six-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected to be $1,800,000; variable cost per unit will be 60% of sales; and f..

Analyze the current and past situations for the firm : You will research and analyze the current and past situations for the firm. Based on these, the major focus of the analysis and presentation should be on the future direction of the firm and on a recommended course of action.

What is the value of the bond : You have found a bond with 4 years and 8 months remaining to maturity. It has a par value of $1,000. It has a coupon rate of 8%. The yield to maturity on the bond is 10%. What is the value of the bond to you today?

How does this view compare with the traditional view of race : How does this view compare with the traditional, biological view of race? How did the traditional view assist or inhibit the assimilation of underserved groups into the overall American majority

Explain stakeholder benefits and possible risks : Explain stakeholder benefits and possible risks associated with both models.

User Account

All Pages