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Just need some help on this problem and an explanation if possible, Thank you!!
10. The following exhibit contains Beech's estimates of demand, price, and fixed and variable costs for the Starship under three alternative economic forecasts. Variable (per year) Pessimistic Normal Optimistic Demand Price* Fixed cost Variable cost 50 2 22 1.75 75 2.7 15 1.50 125 3.2 7 1.0 *Dollars in millions a. If all other variables are assumed to be at their expected value (normal forecast), how sensitive is the project's NPV to changes in fixed cost? Use a cost of capital of 10%, tar rate of 35%, and project life of 10 years. b. How sensitive is the project's NPV to changes in price? c. How sensitive is the project's NPV to changes in variable cost? d. Which factor seems most important to the success of the plane? e. Is the Starship a risky project? Explain
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