Appex Limited is considering investing in a new milk cooling plant. The following estimates have been...

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Appex Limited is considering investing in a new milk cooling plant. The following estimates have been provided to the company's financial analyst about the project. 1. An initial capital outlay of Kshs7 million is required for the purchase of the machine. 2. The machine has an estimated economic life of 5 years. 3. The estimated annual sales volume is 1,000,000 units. 4. The selling price per unit is Kshs14. 5. A variable cost per unit of Kshs 11. 6. Annual fixed costs excluding depreciation of Kshs1 million. 7. A required rate of return of 10%. 8. Tax rate 30%. Required: Undertaken a break-even sensitivity analysis on the bases of: (i) Initial capital outlay, Sales volume and, (ii) (iii) Variable cost. (3 marks) (6 marks) (6 marks) Appex Limited is considering investing in a new milk cooling plant. The following estimates have been provided to the company's financial analyst about the project. 1. An initial capital outlay of Kshs7 million is required for the purchase of the machine. 2. The machine has an estimated economic life of 5 years. 3. The estimated annual sales volume is 1,000,000 units. 4. The selling price per unit is Kshs14. 5. A variable cost per unit of Kshs 11. 6. Annual fixed costs excluding depreciation of Kshs1 million. 7. A required rate of return of 10%. 8. Tax rate 30%. Required: Undertaken a break-even sensitivity analysis on the bases of: (i) Initial capital outlay, Sales volume and, (ii) (iii) Variable cost. (3 marks) (6 marks) (6 marks)

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