Question: a. Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to within +10 percent.
a. Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to within +10 percent. What are the upper and lower bounds for these projections? What is the base-case NPV? What are the best-case and worst-case scenarios? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round your NPV answers to 2 decimal places, e.g., 32.16. Round your other answers to the nearest whole number, e.g. 32. Scenario Unit Sales Variable Cost Fixed Costs NPV Base 260) $ 12,950) $ Best 11,655 585,000 Worst 14,245 715,000 b. Evaluate the sensitivity of your base-case NPV to changes in fixed costs. Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What is the cash break-even level of output for this project (ignoring taxes)? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. d-1. What is the accounting break-even level of output for this project? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. d-2. What is the degree of operating leverage at the accounting break-even point? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. b. ANPV/AFC | c. Cash break-even d-1. Accounting break-even d-2. Degree of operating leverage
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
Students Have Also Explored These Related Finance Questions!