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You have developed the following estimates for a project. The depreciation is $17,340 a year and...
You are considering a new product launch. The project will cost $1,750,000, have a four-year life,...
You are considering a new product launch. The project will cost $1,750,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 220 units per year; price per unit will be $20,000, variable cost per unit will be $13,000, and fixed costs will be $500,000 per year. The required return on the project is 15 percent, and the relevant tax rate is 34 percent. a. The unit sales, variable cost, and fixed...
You are considering a new product launch. The project will cost $1,600,000, have a four-year life,...
You are considering a new product launch. The project will cost $1,600,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 160 units per year; price per unit will be $20,000, variable cost per unit will be $11,500, and fixed costs will be $470,000 per year. The required return on the project is 15 percent, and the relevant tax rate is 35 percent. a. The unit sales, variable cost, and...
You are considering a new product launch. The project will cost $840,000, have a year life,...
You are considering a new product launch. The project will cost $840,000, have a year life, and have no salvage value: depreciation is straight-line to zero. Sales are projected at 500 units per year: price per unit will be $18,600, variable cost per unit will be $15,300, and fixed costs will be $860,000 per year. The required return on the project is 11 percent, and the relevant tax rate is 22 percent. a. The unit sales, variable cost, and fixed...
You are considering a new product launch. The project will cost $2,150,000, have a four year...
You are considering a new product launch. The project will cost $2,150,000, have a four year life, and have no salvage value, depreciation is straight-line to zero. Sales are projected at 150 units per year, price per unit will be $28,000, variable cost per unit will be $17,000, and fixed costs will be $580,000 per year. The required retum on the project is 12 percent, and the relevant tax rate is 34 percent a. The unit sales, variable cost, and...
A project under consideration costs $400,000, has a five-year life and has no salvage value. Depreciation...
A project under consideration costs $400,000, 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 Base Case Upper Lower Bound Bound 2,625 $294 $126 $273,000 Unit Sales Price Per Unit Variable Cost Per Unit Fixed Costs 2,500 $280 $120 $260,000 2,375 $266 $114 $247,000 The required return is 10 percent and the tax rate is 30 percent. No additional investment in net working capital...
Magellen Industries is analyzing a new project. The data they have gathered to date is as...
Magellen Industries is analyzing a new project. The data they have gathered to date is as follows: Lower Bound Expected Value Upper Bound Sales quantity 9500 10000 10500 Sales price per unit $9.75 $10.00 $10.25 Variable cost per unit $4.80 $5.20 $5.60 Fixed cost $15,000.00 $18,000.00 $21,000.00 Initial requirement for equipment: $120,000 Depreciation: Straight-line to zero over the four-year life of the project with no salvage value. Required rate of return: 15% Marginal tax rate: 35% What is the operating...
You are considering a new product launch. The project will cost $820,000, have a four-year life,...
You are considering a new product launch. The project will cost $820,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 450 units per years; price per unit will be $18,000; variable cost per unit will be $15,400; and fixed costs will be $610,000 per year. The required return on the project is 15% and the tax rate is 35%. a) Based on your experience, you think the unit sales, variable...
You are considering a new product launch. The project will cost $720,000, have a 4-year life,...
You are considering a new product launch. The project will cost $720,000, have a 4-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 380 units per year; price per unit will be $17,400; variable cost per unit will be $14,100; and fixed costs will be $680,000 per year. The required return on the project is 15 percent and the relevant tax rate is 21 percent. a. Based on your experience, you think the...
You are considering a new product launch. The project will cost $2,100,000, have a 4-year life,...
You are considering a new product launch. The project will cost $2,100,000, have a 4-year life, and have no salvage value; depreciation is straight-line to 0. Sales are projected at 160 units per year; price per unit will be $27,000; variable cost per unit will be $16,500; and fixed costs will be $570,000 per year. The required return on the project is 14%, and the relevant tax rate is 32%. a. Based on your experience, you think the unit sales,...
A project requires an initial investment of $10,000, straight-line depreciable to zero over four years. The...
A project requires an initial investment of $10,000, straight-line depreciable to zero over four years. The discount rate is 10%. Your tax bracket is 34% and you receive a tax credit for negative earnings in the year in which the loss occurs. Additional information for variables with forecast error are shown below. Base Case Lower Bound Upper Bound Unit Sales 3,000 2,750 3,250 Price/unit $14 $13 $16 Variable cost/unit $9 $8 $10 Fixed costs $9,000 $8,500 $10,000 Suppose you are...
You are considering a new product launch. The project will cost $840,000, have a year life, and have no salvage value: depreciation is straight-line to zero. Sales are projected at 500 units per year: price per unit will be $18,600, variable cost per unit will be $15,300, and fixed costs will be $860,000 per year. The required return on the project is 11 percent, and the relevant tax rate is 22 percent. a. The unit sales, variable cost, and fixed...
You are considering a new product launch. The project will cost $2,150,000, have a four year life, and have no salvage value, depreciation is straight-line to zero. Sales are projected at 150 units per year, price per unit will be $28,000, variable cost per unit will be $17,000, and fixed costs will be $580,000 per year. The required retum on the project is 12 percent, and the relevant tax rate is 34 percent a. The unit sales, variable cost, and...
A project under consideration costs $400,000, 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 Base Case Upper Lower Bound Bound 2,625 $294 $126 $273,000 Unit Sales Price Per Unit Variable Cost Per Unit Fixed Costs 2,500 $280 $120 $260,000 2,375 $266 $114 $247,000 The required return is 10 percent and the tax rate is 30 percent. No additional investment in net working capital...
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