In the previous problem, you feel that the units sold, variable costs, and fixed costs are accurate to within only ± 10 percent. What are the best-case and worst-case NPVs? The price and variable costs for the two existing sets of clubs are known with certainty; only the sales gained or lost are uncertain.
Answer to relevant QuestionsMcGilla Golf (see Problem 14) would like to know the sensitivity of NPV to changes in the price of the new clubs and the quantity of new clubs sold. What is the sensitivity of the NPV to each of these variables? In ...Samuelson, Inc., has just purchased a $675,000 machine to produce calculators. The machine will be fully depreciated by the straight-line method over its economic life of five years and will produce 21,000 calculators each ...Shane's Toys Inc. just purchased a $325,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its five-year economic life. Each toy sells for $32. The variable cost per toy ...Refer back to Table 10.2 . What range of returns would you expect to see 68 percent of the time for long-term corporate bonds? What about 95 percent of the time? Table 10.2 Refer to Table 10.1 in the text and look at the period from 1973 through 1978. a. Calculate the arithmetic average returns for large-company stocks and T-bills over this time period. b. Calculate the standard deviation of ...
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