Question

b. Although the company is optimistic about the new model, the board wants to know at what level launching the new model becomes risky. Use an Excel spreadsheet and recalculate after tax cash flows and net present value for the below scenarios: (i) Sales units at 10% higher than estimated in the first year (6 marks). (ii) Sales units at 10% lowerthan estimated in the first year (6 marks). (ii) Comments on your findings (4 marks). (iv) You are required to use after-tax cash flows. Explain why this requirement is appropriate in decision making (4 marks). c. Regarding buying new production machines at $7.5m to produce the new product, you can pay all at once when the purchasing contract is signed and recelve a5% discount. You can also choose to pay monthly or quarterty. I, you pay monthly, you will pay at the end of each month. The mo they payment S260 000 in the first year and $410,000 in the second year. If you pay quarterly, you will pay at the end of the quarter and the quarterly payment is $670,000 in 3 years. Using a risk adjusted rate of 8% and an Excel spreadsheet, provide a futy worked analysis. Decide and explain which payment option should be unde taken 10 marks).

Answer 1

I have Uploaded image for answer of question and all answer in Table which is calculated amount in $. And Answer is Given

Question Wise and Working are done in Working Table.