Question: straight - line to zero over the five - year project life. It also estimates a salvage value of $ 4 0 0 , 0

straight-line to zero over the five-year project life. It also estimates a salvage value of $400,000 after dismantling costs. The marketing department estimates that the automakers will let the contract at a selling price of $295 per ton. The engineering department estimates you will need an initial net working capital investment of $380,000. You require a return of 13 percent and face a tax rate of 22 percent on this project.
a. Suppose you're confident about your own projections, but you're a little unsure about Detroit's actual machine screw requirement. What is the sensitivity of the project OCF to changes in the quantity supplied? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g.,32.16.)
b. What is the sensitivity of NPV to changes in quantity supplied? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g.,32.16.)
c. Given the sensitivity number you calculated, what is the minimum level of output below which you wouldn't want to operate? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g.,32.)
 straight-line to zero over the five-year project life. It also estimates

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
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!