What is the change to the net present value

Assignment Help Operation Management
Reference no: EM132820059

A project has an initial cost of $36,000 for equipment, which will be depreciated straight-line to zero over the five-year life of the project. There is $2,000 salvage value on the equipment. No working capital is required. Sales are estimated at 10,000 units at a selling price of $32.50 per unit. Variable costs are $14.50 and total fixed costs are $56,000. The tax rate is 35% and the required rate of return is 10%.

a) For every $4 increase in the variable cost per unit (that is, we increase the variable cost from $14.5 to $18.5), what will be the change to the net present value?

b) If the total fixed cost increase by $10,000, what is the change to the net present value?

Reference no: EM132820059

Questions Cloud

What amount shall be reported as sales : What amount shall be reported as (1) sales and (2) cost of goods sold in 2018 assuming the residual value is guaranteed
Compute the output value-added tax : Compute the output value-added tax for each of the following: Consideration in the deed of sale 4,000,000 and Zonal Value 5,000,000
Describe the sentence handed down in the case : Describe the sentence handed down in this case. Discuss whether the victim expressed any comment or participated in the sentencing process if that information.
Difference between business and pure charity : What are some forms of regulation in the healthcare industry? What is the difference between a business and a pure charity?
What is the change to the net present value : If the total fixed cost increase by $10,000, what is the change to the net present value?
What is the total income derived by the company from lease : What is the total income derived by the company from the lease for the year 2018? What is the total interest that the company will earn over the lease term?
Identify at least two myths discussed in the unit : Identify at least two myths discussed in this unit, who perpetrates the myths you identified, and why these are important to understand.
How much is the total monthly payment for mortgage : You decide to buy a house for a total of $208,688. To get a mortgage loan, you make a 10% down payment, and the bank will lend you the rest.
About external organizational challenge : Share a recent example from business news about an external organizational challenge, how the company addressed it (internal factors),

Reviews

Write a Review

Operation Management Questions & Answers

  Book review - the goal

Operations Management is about a book review. Title of the book is "Goal". This book has been written by Dr. Eliyahu Goldartt. The book has been appreciated by many as one of those books which offers an insight into the operations and strategic capac..

  Operational plan in hospitality enterprise

Operational plan pertaining to a hospitality enterprise is given in detail in the solution. The operational plan is an important plan or preparation which gives guidelines regarding the role and responsibilities of each and every operation at all lev..

  Managing operations and information

Recognise the importance of a strategic approach to the development and deployment of organisational information systems. Demonstrate an understanding of the importance of databases and their integration to the organisation's overall information mana..

  A make-or-buy analysis

An analysis of the holding costs, including the appropriate annual holding cost rate.

  Evolution and contributor of operations management

Briefly explain Evolution and contributor of Operations management.

  Functions and responsibilities of an operations manager

A number of drivers of change have transformed the roles, functions and responsibilities of an operations manager over recent years. These drivers have not only been based on technological innovations but also on the need for organisations to develop..

  Compute the optimal order quantity

Compute the Optimal Order quantity of DVD players. Determine the appropriate reorder point.

  Relationship to operations practice in the organisation

Evaluate problems in operations and identify approaches to overcoming them. Critically evaluate operating plans and identify areas for improvement. Justify, implement and evaluate changes to operations in line with modern approaches.

  A make or buy analysis

Develop a report for Figi Fabricating that will address the question of whether the company should continue to purchase the part from the supplier or begin to produce the part itself.

  Prepare a staffing plan

Prepare a staffing plan showing the change of your unit from medical/surgical staffing to oncology staffing.

  Leadership styles in different organizations

Ccompare the effectiveness of different leadership styles in different organizations

  Risk management tools and models

Be able to understand the concept of risk, roles and responsibilities for risk management and risk management tools and models.

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