The following tentative initial estimates have been made for an investment: Kshs. 100 million at the...

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The following tentative initial estimates have been made for an investment: Kshs. 100 million at the beginning of the project. Kshs.3, 000 Kshs.2, 000 10% per annum 3 years Life Sales volume: Year one 40,000 units Year two 60,000 units Year three 30,000 units The Kshs. 100 million used to purchase equipment at the beginning of the project which will be used to manufacture a product produced at the above unit cost and selling at the sales price in the volume indicated above. Salvage value is zero and depreciation is on a straight line basis. The corporate tax applicable to this project is 30%. Required: Calculate the maximum tolerable unfavorable change (as a percentage of the original (estimated value) for factors 1 to 3 above (9 marks) The following tentative initial estimates have been made for an investment: Kshs. 100 million at the beginning of the project. Kshs.3, 000 Kshs.2, 000 10% per annum 3 years Life Sales volume: Year one 40,000 units Year two 60,000 units Year three 30,000 units The Kshs. 100 million used to purchase equipment at the beginning of the project which will be used to manufacture a product produced at the above unit cost and selling at the sales price in the volume indicated above. Salvage value is zero and depreciation is on a straight line basis. The corporate tax applicable to this project is 30%. Required: Calculate the maximum tolerable unfavorable change (as a percentage of the original (estimated value) for factors 1 to 3 above (9 marks)

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