Question: Saved Check my work mode : This shows what is correct or incorrect for the work you have completed so far. 15 6.76 points You

Saved Check my work mode : This shows what is correct or incorrect for the work you have completed so far. 15 6.76 points You are considering a new product launch. The project will cost $900,000, have a 5-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 290 units per year; price per unit will be $15,895, variable cost per unit will be $11,700, and fixed costs will be $595,000 per year. The required return on the project is 12 percent, and the relevant tax rate is 22 percent. 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 is the sensitivity of your base-case NPV to changes in fixed costs? (Enter your answer as a positive value. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. For every dollar FC increases, NPV falls by $ -2.81 X
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
