Consider a four-year project with the following information: initial fixed asset investment = $430,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $29; variable costs = $18; fixed costs = $320,000; quantity sold = 91,000 units; tax rate = 34 percent. How sensitive is OCF to changes in quantity sold?
Answer to relevant QuestionsYou are considering a new product launch. The project will cost $720,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 180 units per year; price per unit ...In the previous problem, suppose you think it is likely that expected sales will be revised upwards to 17,000 units if the first year is a success and revised downward to 3,400 units if the first year is not a success. a. If ...In Problem 26, suppose you’re confident about your own projections, but you’re a little unsure about Detroit’s actual machine screw requirement. What is the sensitivity of the project OCF to changes in the quantity ...In Problem 9, suppose the average inflation rate over this period was 2.8 percent and the average T-bill rate over the period was 3.6 percent. a. What was the average real return on Yasmin’s stock? b. What was the average ...In the previous problem, what is the probability that the return is less than –100 percent? (Think.) What are the implications for the distribution of returns?
Post your question