A company has been considering the production of a new product. The costs and returns associated with

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A company has been considering the production of a new product. The costs and returns associated with this product are displayed in the table below (all figures are in $ millions) and are based on expected unit sales of 100,000. Assume that the cost of capital is 8% and that income is taxed at a rate of 30%. Ignore depreciation.

a) What is the NPV of this project?

b) Draw a break-even chart for this project based upon projections of sales and explain how you would interpret the break-even figure.

Posted Date: Sep 13, 2021 05:25 PM

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A company has been considering the production of a new product. The costs and returns associated with

Question:

Year 0 Years 1-5 Investment $12 Revenue $40 Variable Cost $30 Fixed Cost $4 Pretax Profit $6 Tax $1.8 Net Operating Profit $4.2 Year 0 Years 1-5 Investment $12 Revenue $40 Variable Cost $30 Fixed Cost $4 Pretax Profit $6 Tax $1.8 Net Operating Profit $4.2

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