A project under consideration costs $200,000, has a five-year
life and has no salvage value. Depreciation is straight-line to
zero. The firm has made the following projections related to this
project:
|
Requirement 1: |
What are the worst-case and best-case scenarios for this project? (Input unit sales as number of units. Round all other answers to the nearest whole dollar (e.g., 32).) |
Worst Case | Best Case | |
Unit Sales | ||
Price Per Unit | $ | $ |
Variable Cost Per Unit | $ | $ |
Fixed Costs | $ | $ |
Requirement 2: |
Your analysis of the project's NPV in the "base case" shows a NPV of $92,978. However, your boss has asked you to determine the sensitivity of the project's NPV to potential changes in fixed costs. Using the firm's estimate of the highest possible level of fixed costs, complete the table below and use your results to assess the sensitivity of the project's NPV to changes in fixed costs. (Round all answers except your sensitivity estimate to the nearest whole dollar (e.g., 32). Round the sensitivity estimate to 2 decimal places (e.g., 32.16). Negative amounts should be indicated by a minus sign.) |
Sales | $ |
Variable Costs | $ |
Fixed Costs | $ |
Depreciation | $ |
EBIT | $ |
Taxes | $ |
Net Income | $ |
Operating Cash Flow | $ |
Net Present Value (NPV) | $ |
Sensitivity (ΔNPV/ΔFC) | $ |
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