(Related to Checkpoint 13.2 and Checkpoint 13.3) Comprehensive risk analysis) Blinkeria is considering Introducing a...
50.1K
Verified Solution
Link Copied!
Question
Finance
(Related to Checkpoint 13.2 and Checkpoint 13.3) Comprehensive risk analysis) Blinkeria is considering Introducing a new line of hand scanners that can be used to co material and then download into a personal computer These scanners are expected to set for an average price of $96 each, and the company analysts performing the analysis spect that the firm can set 110.000 units per year at this price for a period of five years after which time they expect demand for the product to end as a result of new technology In addition variable costs are expected to be $20 per unit and fixed costs not including depreciation are forecast to be $1.000.000 per year To manufacture this product Binkeria will need to buy a computerized production machine for $97 million that has no residual or salvage value and will have an expected life of five years in addison the firm expects it will have to invest an additional $309.000 in working capital to support the new business Other pertinent information concerning the business venture in provided here a. Calculate the project's NPV. b. Determine the sensitivity of the project's NPV to ain) 9 percent decrease in the number of units sold c. Determine the sensitivity of the projects NPV to ain) 9 percent decrease in the price per unit d. Determine the sensitivity of the project's NPV to ain) 9 percent increase in the variable cost per unit e. Determine the sensitivity of the project's NPV to a[n) 9 percent increase in the annual foed operating costs 1. Use scenario analysis to evaluate the project's NPV under worst and best-case scenarios for the project's value drivers. The values for the expected or base cane along with the worst- and best case scenarios are listed here a. The NPV for the base-case will be s (Round to the nearest dollar) Data Table 6 Data Table Expected or Base Case 110.000 596 $(20) 5(1,040,000) 5(1,940,000) Unit sales Price per unit Variable cost per unit Cash fixed costs per year Depreciation expense Worst Case 77.000 58544 $(2180) $11.258.400) $(1.940,000) Best Case 143,000 $11712 $(1840) ${925.600) $11.940.000) 59,700,000 5 years Initial cost of the machine Expected to Salvage value of the machine Working capital tequirement Depreciation method Depreciation expense Cash fired costs--cccluding depreciation Variable costs per un Required rate of retum or cost of capital Tax rate Print Done $309.000 straight line $1.9.10 000 per year 51 040 000 per year 520 93% 34% Print Done Enter your answer in the answer box and then click Check
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!