Calculate the best-case and worst-case NPV figures

Assignment Help Financial Management
Reference no: EM13915373

We are evaluating a project that costs $1,100,000, has a ten-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 42,000 units per year. Price per unit is $50, variable cost per unit is $25, and fixed costs are $820,000 per year. The tax rate is 35 percent, and we require a return of 10 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±10 percent.

Calculate the best-case and worst-case NPV figures.

Reference no: EM13915373

Questions Cloud

What is the labor productivity per labor hour for product : What is the labor productivity per labor hour for this product? What is the energy productivity for this product? What is the multifactor productivity for this product?
Detroit hospital security breach-incident background : A breach in security can be devastating to any company especially if it involves sensitive information that is damaged or stolen by an outside source such as patient's names, date of birth etc. Sensitive information can be any personal information..
Laws governing qualified retirement plans : An employer suggested to provide the following vesting schedules. Determine if these schedules comply with the laws governing qualified retirement plans [explain]:
Record the transaction : Jervis sells $4,400 of its accounts receivable to Northern Bank in order to obtain necessary cash. Northern Bank charges a 4% factoring fee. What entry should Jervis make on to record the transaction?
Calculate the best-case and worst-case NPV figures : We are evaluating a project that costs $1,100,000, has a ten-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 42,000 units per year. Calculate the best-case an..
Identify and briefly discuss the competing ethical positions : Identify and briefly discuss the competing ethical positions
Software developer development and improvement : This assignment consists of two (2) sections: an improvement plan and a PowerPoint presentation. You must submit the two (2) sections as separate files for the completion of this assignment.
Discuss characteristics of performance management system : You are the HR Director at BFNA. Discuss the main characteristics of the performance management system that you have implemented to withstand legal challenges such as Carol's.
Considering project with an initial cash outlay : You are considering a project with an initial cash outlay of $80,000 and expected free cash flow of $21,600 at the end of each year for 6 years. the required rate of return for this project is 10.8 percent. a. what is the project's payback period? b...

Reviews

Write a Review

Financial Management Questions & Answers

  What coupon rate should the company set

Wyland Co. wants to issue new 20-year bonds for some much-needed expansion projects. The company currently has 7 percent coupon bonds on the market that sell for $1,085, make semiannual payments, and mature in 20 years. What coupon rate should the co..

  Principal are loyalty-obedience-performance

The duties of an agent to her principal are loyalty, obedience, performance and which of the following: Administrative law agencies usually have three types of authority.

  What is the cross rate between francs and pounds

The exchange rate between the US dollar and the Swiss Franc is SF1.3=$1, and the exchange rate betweent he dollar and the British pound is BP1=$1.40. What is the cross rate between francs and pounds.

  Describe the liability of the partnership-fresher flowers

Fran, Joe, and Mike formed a general partnership to operate a flower shop called Fresher Flowers. One of Fran’s jobs is to make deliveries using the partnership truck. In one such delivery, Fran negligently ran a stop sign, striking a car driven by P..

  What is the estimated required rate of return on stock

Woidtke Manufacturing's stock currently sells for $40 a share. The stock just paid a dividend of $1.00 a share (i.e., D0 = $1.00), and the dividend is expected to grow forever at a constant rate of 5% a year. What stock price is expected 1 year from ..

  The liquidity premium on the corporate bond

A Treasury bond that matures in 10 years has a yield of 6%. A 10-year corporate bond has a yield of 9%. Assume that the liquidity premium on the corporate bond is 0.5%. What is the default risk premium on the corporate bond?

  Portfolio manager of the delaware fund

Assume that you are the portfolio manager of the Delaware Fund, a $4 million mutual fund that contains the following stocks: Stock Amount Beta A $ 400,000 1.50 B $ 600,000 0.50 C $1,000,000 1.25 D $2,000,000 0.75. The required rate of return in the m..

  How many estimates are needed to optimize this portfolio

A portfolio manager analyzes 100 stocks and constructs a mean-variance efficient portfolio using these 100 securities.   How many estimates are needed to optimize this portfolio?  Break down the variance of each stock to the systematic and firm-speci..

  Market maker-bid price and ask price

As a Market Maker, you would ________ at the Bid Price and ________ at the Ask Price (a.k.a. the Offer Price). In addition, your client would ________ at the Bid Price and ________ at the Ask Price.

  Explain functional currency of the subsidiary the peso

Senior managers of the subsidiary are employees of Qing Corporation who have been transferred to the subsidiary for a tour of international service. Is the functional currency of the subsidiary the peso or the U.S. dollar? Explain your reasoning

  Treasury-bond futures contract-initial margin requiremet

You purchase a Treasury-bond futures contract with an initial margin requirement of 15% and a futures price of $114,550. The contract is traded on a $100,000 underlying par value bond. If the futures price falls to $107,300, what will be the percenta..

  Lender charges interest at an annual effective interest rate

A 30-year loan of $1000 is repaid with payments at the end of each year. Each of the first ten payments is $80. Each of the next ten payments equals 80% of the amount of interest due. Each of the last ten payments equals the amount of interest due pl..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd