Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

We are evaluating a project that costs $924,000, has an eight-year life, has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 75,000 units per year. Price per unit is $46, variable cost per unit is $31, and fixed costs are $825,000 per year. The tax rate is 35% and we require a 15% return on this project.

1) find out the accounting break-even point. What is the degree of operating leverage at the accounting break-even point?

2) find out the base-case cash flow and NPV. What is the sensitivity of NPV to changes in the sales figure? describe what your answer tells you about a 500-unit decrease in projected sales.

3) What is the sensitivity of OCF to changes in the variable cost figure? describe what your answer tells you about a $1 decrease in estimated variable costs.

4) Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate within +/- 10%. find out the best case and worst case NPV figures.

Please show all work in excel and formulas.

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M924114
  • Price:- $20

Guranteed 24 Hours Delivery, In Price:- $20

Have any Question? 


Related Questions in Basic Finance

1 some people purposely ignore a bill and put it out of

1. Some people purposely ignore a bill and put it out of their minds in order to avoid the stress associated with it. Other people pay their bills immediately because they worry that they might forget about paying them. ...

1 describe a 2 x 2 x 3 factorial design how many

1. Describe a 2 x 2 x 3 factorial design. How many independent variables are involved, and how many levels are there of each variable? How many experimental conditions are in a 2 x 2 x 3 factorial design? 2. Distinguish ...

Identify the three parties involved in any credit

Identify the three parties involved in any credit derivatives transaction and describe how they differ in their roles and responsibilities with regard to the transaction? If a portfolio of derivatives is delta hedged by ...

1 why is variance reduction important to logistical

1. Why is variance reduction important to logistical integration? Illustrate in terms of logistical operations. 2. What is the meaning of the phrase cradle-to-cradle logistics? Discuss the operational differences of orig ...

Go to one of the web sites that contain video clips such as

Go to one of the Web sites that contain video clips (such as www.youtube.com) and view some video clips about personal loan applications. You can use search phrases such as "personal loans." Select one video clip on this ...

1 compare and contrast the three types of observation

1. Compare and contrast the three types of observation, identifying the advantages and disadvantages of each. 2. Most descriptive research designs gather information from a group of participants. However, the case study ...

What is the purpose of a performance attribution model in

What is the purpose of a performance attribution model? In terms of the price-to-book (P/B) ratio, why are value stocks generally considered those with low P/B ratios? Comment on the following statements: a. "All one nee ...

1 what is the secondary mortgage market list three reasons

1. What is the secondary mortgage market? List three reasons why it is important. 2. What were the three principal activities of FNMA under its 1954 charter? What is its principal function now? 3. Name two ways that FNMA ...

Explain why interest rate swaps are more widely used than

Explain why interest rate swaps are more widely used than currency and equity swaps? Explain how swaps are similar to but different from forward contracts ? Suppose that a party engages in a swap, but before the expirati ...

1 how would stephanies money management decisions be

1. How would Stephanie's money management decisions be different if she were a single mother of two children? 2. How would Stephanie's money management decisions be affected if she were 35 years old? If she were 50 years ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro