Question: The following table lists the expected cash flows from a new project with 8% Opportunity Cost of Capital; 40% average tax rate; variable costs are
The following table lists the expected cash flows from a new project with 8% Opportunity Cost of Capital; 40% average tax rate; variable costs are a constant 80% of sales; all numbers in $000s Calculate NPV, payback period, and profitability index of this project. Assume that it will to take two years for competition to enter the market. At this time, sales drop 10% and variable costs increases to 82% (increased labor demand). What happens to NPV under this scenario
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