Homework Answers
Correct option is 'b' sensitivity analysis
Sensitivity analysis is used to understand the effect of a set of independent variables on some dependent variable under certain specific conditions. For example, a financial analyst wants to find out the effect of a company’s net working capital on its profit margin. The analysis will involve all the variables that have an impact on the company’s profit margin, such as the cost of goods sold, workers’ wages, managers’ wages, etc. This analysis will isolate each of these fixed and variable costs and record all the possible outcomes.
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Question 13 analysis. To determine the degree to which the projected not present value of a...
analysis. a. If you want to determine the entire range of project outcomes that are reasonably...
analysis. a. If you want to determine the entire range of project outcomes that are reasonably likely to occur you should use Accounting break-even. b. Financial break-even. Sensitivity. C. Cash break-even. d. Scenario. e.
Sensitivity analysis is the term used to describe the process of examining the effects on the...
Sensitivity analysis is the term used to describe the process of examining the effects on the net present value of a project when: The sales quantity and price are set at the financial break-even level of sales. O a. The most optimistic situation that is obtainable is presented. ob. All the variables are set to create a best or a worst case situation. oc The lower bounds of each variable are contrasted with the respective base values. od. The value...
my question is Q1 , calculating costs and break even , thank you IU. SCUTIU A...
my question is Q1 , calculating costs and break even , thank
you
IU. SCUTIU A JU to your desk and shows you the scenario analysis that he has potential new project. All three scenarios show a positive NPV. He sta to take this project!" What is your initial reaction regarding this new pro believe the results of the scenario analysis? womes that he has just completed for a NPV. He states, "We have this new project. Do you connect...
Problem 11-19 Project Analysis [LO1, 2, 3, 4] You are considering a new product launch. The...
Problem 11-19 Project Analysis [LO1, 2, 3, 4] You are considering a new product launch. The project will cost $1,975,000, 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 $17,700, variable cost per unit will be $11,750, and fixed costs will be $570,000 per year. The required return on the project is 9 percent, and the relevant tax rate is 21 percent....
3 Problem 11-5 Sensitivity Analysis and Break-Even [LO1, 3] We are evaluating a project that costs...
3 Problem 11-5 Sensitivity Analysis and Break-Even [LO1, 3] We are evaluating a project that costs $691,200, has an eight-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 85,000 units per year. Price per unit is $50, variable cost per unit is $35, and fixed costs are $740,000 per year. The tax rate is 24 percent, and we require a return of 10 percent on...
Forst Chef Question had holes and gave incorrect answers. Please correct ? You are considering a...
Forst Chef Question had holes and gave incorrect answers. Please
correct ?
You are considering a new product launch. The project will cost $1,700,000, have a 4-year life, and have no salvage value; depreciation is straight-line to O. Sales are projected at 140 units per year; price per unit will be $22,000; variable cost per unit will be $12.500; and fixed costs will be $490,000 per year. The required return on the project is 10%, and the relevant tax rate...
We are evaluating a project that costs $1,120,000, has a ten-year life, and has no salvage...
We are evaluating a project that costs $1,120,000, 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 64,000 units per year. Price per unit is $50, variable cost per unit is $25, and fixed costs are $620,000 per year. The tax rate is 35 percent, and we require a return of 12 percent on this project. 1.Calculate the accounting break-even point. 2. What...
A project costs $1,400,000, has a four year life, and no re-sale value at the end...
A project costs $1,400,000, has a four year life, and no re-sale value at the end of the project. Depreciation is straight-line to zero. The opportunity cost of capital is 9% and the tax rate is 34%. Sales are projected at 110 units per year. The price per unit is expected to be $30,000, variable costs are projected at $20,500 per unit, and fixed costs will be $515,000 per year. Cash flows from operations are received annually beginning in one...
TEST
You are considering a new product launch. The project will cost $2,400,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 180 units per year; price per unit will be $30,000, variable cost per unit will be $19,500, and fixed costs will be $630,000 per year. The required return on the project is 12 percent, and the relevant tax rate is 35 percent. a.Based on your experience, you think the unit sales,...
Problem 7-1 Sensitivity Analysis and Break-Even Point We are evaluating a project that costs $1,160,000, has...
Problem 7-1 Sensitivity Analysis and Break-Even Point We are evaluating a project that costs $1,160,000, 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 44,000 units per year. Price per unit is $45, variable cost per unit is $20, and fixed costs are $645,000 per year. The tax rate is 35 percent, and we require a return of 20 percent on this project....
analysis. a. If you want to determine the entire range of project outcomes that are reasonably likely to occur you should use Accounting break-even. b. Financial break-even. Sensitivity. C. Cash break-even. d. Scenario. e.
Sensitivity analysis is the term used to describe the process of examining the effects on the net present value of a project when: The sales quantity and price are set at the financial break-even level of sales. O a. The most optimistic situation that is obtainable is presented. ob. All the variables are set to create a best or a worst case situation. oc The lower bounds of each variable are contrasted with the respective base values. od. The value...
my question is Q1 , calculating costs and break even , thank
you
IU. SCUTIU A JU to your desk and shows you the scenario analysis that he has potential new project. All three scenarios show a positive NPV. He sta to take this project!" What is your initial reaction regarding this new pro believe the results of the scenario analysis? womes that he has just completed for a NPV. He states, "We have this new project. Do you connect...
3 Problem 11-5 Sensitivity Analysis and Break-Even [LO1, 3] We are evaluating a project that costs $691,200, has an eight-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 85,000 units per year. Price per unit is $50, variable cost per unit is $35, and fixed costs are $740,000 per year. The tax rate is 24 percent, and we require a return of 10 percent on...
Forst Chef Question had holes and gave incorrect answers. Please
correct ?
You are considering a new product launch. The project will cost $1,700,000, have a 4-year life, and have no salvage value; depreciation is straight-line to O. Sales are projected at 140 units per year; price per unit will be $22,000; variable cost per unit will be $12.500; and fixed costs will be $490,000 per year. The required return on the project is 10%, and the relevant tax rate...
Problem 7-1 Sensitivity Analysis and Break-Even Point We are evaluating a project that costs $1,160,000, 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 44,000 units per year. Price per unit is $45, variable cost per unit is $20, and fixed costs are $645,000 per year. The tax rate is 35 percent, and we require a return of 20 percent on this project....
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