What Is The Sensitivity Of Npv To Changes In The Sales Figure?
Question
B) What is the sensitivity of NPV to changes in the sales figure? (Do not round...
b) What is the sensitivity of NPV to changes in the sales effigy? (Do not round intermediate calculations and round your reply to 3 decimal places, e.g., 32.161.)
e) If at that place is a $i decrease in estimated variable costs, how much would the OCF modify? (Practise not circular intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
Nosotros are evaluating a project that costs $1,920,000, has a half-dozen-year life, and has no salvage value. Assume that depreciation is direct-line to zero over the life of the project. Sales are projected at 94,500 units per twelvemonth. Price per unit of measurement is $38.43, variable cost per unit is $23.lx, and fixed costs are $839,000 per year. The tax rate is 23 percentage, and we crave a return of 10 percent on this project.
Answers
b) What is the sensitivity of NPV to changes in the sales figure?
=(38.43-23.threescore)*(one-23%)/ten%*(1-ane/1.i^half-dozen)
=49.73315745due east) If at that place is a $1 decrease in estimated variable costs, how much would the OCF alter?
=(-1)*(94500*(-1))*(one-23%)
=72765
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