Question: 3 (1 point) Consider the feasibility study shown in the table. You have been advised that sales revenues may be 10 percent lower and/or development

3 (1 point) Consider the feasibility study shown in the table. You have been advised that sales revenues may be 10 percent lower and/or development costs may be 10 percent higher. Performing a sensitivity analysis, you conclude which of the following? Total sales revenue $ 10,000,000 Less: Development cost 6,000,000 Less: Land asking price 1,000,000 Potential gross profit $ 3,000,000 Less: Administration, legal, commissions, etc. 1,500,000 Potential net profit $ 1,500,000 Question 3 options: A 10 percent increase in development costs would have a bigger impact on returns than a 10 percent decrease in sales revenues. A 10 percent decrease in sales revenues would have a bigger impact on returns than a 10 percent increase in development costs. Both factors would have such a small impact that there is no reason to be concerned about either a 10 percent increase in development costs or a 10 percent decrease in sales revenues. A 10 percent increase in development costs and a 10 percent decrease in sales revenues would have opposite impacts on returns, canceling each other out and having no impact on returns

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