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We are evaluating a project that costs $1,180,000, 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 66,000 units per year. Price per unit is $45, variable cost per unit is $25, and fixed costs are $750,000 per year. The tax rate is 35 percent, and we require a 15 percent return on this project.
1. Calculate the base-case cash flow and NPV.
2. What is the sensitivity of NPV to changes in the sales figure?
3. What is the sensitivity of OCF to changes in the variable cost figure?
A firm has an inventory turnover of 8.11, an inventory period of 45 days, average inventory of $650,000, a receivables period of 32 days, and average payables of $750,000. What is its cash cycle?
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Hiring physically challenged people to clean bowling shoes will save BowlingBackOffice, Inc (BBO) $3,000 per year for the next 5 years but will require a $10,000 investment to retrofit the work area and review operating procedures to ensure that the ..
An engineering company in Virginia that owns 250 acres of valuable land has decided to lease the mineral rights to a mining company. The primary objective is to obtain long term income to finance ongoing projects 5 and 15 years from the present time...
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1.what are financial ratios and why are they useful?2.what are the three types of comparisons that can be made when
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