Solution-What is the net income level for each of the

What is the net income level for each of the scenarios

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Question - You have the following information regarding prospective sales for a proposed new project. It is expected that the project has a 5 year life and that the initial cost will amount to R200000. In a market survey it was found that most probable sales are expected to be 6000 units, worst case sales 5500 units and best case sales 6500 units. Depreciation is straight-line to zero. As part of your investigation into financial viability you decide to do a scenario analysis for decision-making purposes. Taxes are charged at a flat rate of 30%. In the table below, you will find some more important information. Required rate of return is 12%.

	Base case	Worst case	Best case
Sales price/unit	R80	R75	R85
Sale (Units)	6000	5500	6500
Variable cost	R60	55	65
Fixed cost	R50000	R45000	R55000

What is the net income level for each of the scenarios?

What are the net operating cash flows per year for each of the scenarios?

What is the NPV and MIRR for each of the scenarios?

Reference no: EM132550674

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What is the net income level for each of the scenarios

Reference no: EM132550674

Reference no: EM132550674

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