Question: Sensitivity Analysis and Break-Even: We are evaluating a project that costs $845,000, has an eight-year life, and has no salvage value. Assume that depreciation is
Sensitivity Analysis and Break-Even: We are evaluating a project that costs $845,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 51,000 units per year. Price per unit is $53, variable cost per unit is $27, and fixed costs are $950,000 per year. The tax rate is 22 percent, and we require a return of 10 percent on this project.
Show P&L, OCF, NPV for 500 unit decrease in sales, and NPV for a $1/unit decrease in VC.
plz use excel form, thx!
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