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We are evaluating a project that costs $1,500,000; has a six-year life. Assume that depreciation is straight line to zero over the life of the project. Sales are projected at 81,000 units per year

We are evaluating a project that costs $1,500,000; has a six-year life. Assume that depreciation is straight line to zero over the life of the project. Sales are projected at 81,000 units per year. Price per unit is $35.50; variable cost per unit is $19.50; and fixed costs are $800,000 per year. The tax rate is 35%, and you require an 12% return on this project. a. Calculate the base-case cash flow and NPV. b. What is the sensitivity of NPV to a 1000 unit decrease in projected sales?

Apr 14 2021 View more View Less

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