Question: While evaluating a project that costs $2.58 million having 6 years life has no salvage value. Estimated sales at $3150000 per year, price per unit

While evaluating a project that costs $2.58 million having 6 years life has no salvage value. Estimated sales at $3150000 per year, price per unit is 45$, variable cost per unit is 12.5$ and fixed cost $37500 per year. The tax rate of return is 18% and 11% respectively. Show the steps of computation.

While evaluating a project that costs $2.58 million having 6 years life

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1. Find the base cash flow and base NPV ( 3 points) 2. What is the sensitivity of NPV to change is sales figure ( 2 points) 3. Find the NPV change for a 400 unit decrease of projected sales ( 2 points)

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