Fin 301 HW 7 You are because a novellightlight consequence propel. The purpose earn consume $2,250,000, enjoy a four-year animation, and enjoy no salvage prize; derogation is straight-course to cipher. Sales are purposeed at 140 items per year; worth per item earn be $30,000, inconstant consume per item earn be $18,000, and unwandering consumes earn be $600,000 per year. The demandd revert on the purpose is 10 percent, and the apt duty scold is 35 percent. a. Based on your trial, you judge the item sales, inconstant consume, and unwandering consume purposeions ardent here are probably accuscold to among ±10 percent. What are the upper and inferior confine control these purposeions? What is the base-case NPV? What are the best-case and worst-case scenarios? (Negative sums should be implied by a minus token. Do referable attributable attributable attributable attributable attributable attributable attributable attributable attributable rotund intervening calculations. Rotund your NPV confutations to 2 decimal places, e.g., 32.16. Rotund your other confutations to the unswerving sound sum, e.g. 32.) Scenario Item Sales Inconstant Consume Unwandering Consumes NPV Base $ $ $ Best Worst b. Evaluate the sensitivity of your base-case NPV to changes in unwandering consumes. (Negative sum should be implied by a minus token. Do referable attributable attributable attributable attributable attributable attributable attributable attributable attributable rotund intervening calculations. Rotund your confutation to 3 decimal places, e.g., 32.161.) ΔNPV/ΔFC $ c. What is the money break-even roll of output control this purpose (ignoring dutyes)? (Do referable attributable attributable attributable attributable attributable attributable attributable attributable attributable rotund intervening calculations. Rotund your confutation to 2 decimal places, e.g., 32.16.) Money break-even d-1 What is the accounting break-even roll of output control this purpose? (Do referable attributable attributable attributable attributable attributable attributable attributable attributable attributable rotund intervening calculations. Rotund your confutation to 2 decimal places, e.g., 32.16.) Accounting break-even d-2 What is the station of exempt leverage at the accounting break-even object? (Do referable attributable attributable attributable attributable attributable attributable attributable attributable attributable rotund intervening calculations. Rotund your confutation to 3 decimal places, e.g., 32.161.) Station of exempt leverage

Fin 301 HW 7 McGilla Golf has ruled to vpurpose a novellightlight course of golf clubs. The clubs earn vpurpose control $740 per established and enjoy a inconstant consume of $340 per established. The corporation has gone-by $144,000 control a marketing consider that solid the corporation earn vpurpose 56,000 establisheds per year control seven years. The marketing consider so solid that the corporation earn destroy sales of 8,900 establisheds of its rich clubs. The rich clubs vpurpose at $1,040 and enjoy inconstant consumes of $640. The corporation earn so growth sales of its vile clubs by 10,400 establisheds. The vile clubs vpurpose control $380 and enjoy inconstant consumes of $200 per established. The unwandering consumes each year earn be $9,040,000. The corporation has so gone-by $1,050,000 on investigation and product control the novellightlight clubs. The set and equipment demandd earn consume $28,280,000 and earn be underestimated on a straight-course account. The novellightlight clubs earn so demand an growth in intrap established cardinal of $1,240,000 that earn be reverted at the purpose of the purpose. The duty scold is 40 percent, and the consume of cardinal is 10 percent. Suppose you arrive-at that the prizes are accuscold to among simply ±10 percent. What are the best-case and worst-case NPVs? (Hint: The worth and inconstant consumes control the brace real establisheds of clubs are disclosed with certainty; simply the sales gained or lost are doubtful.) (Negative sums should be implied by a minus token. Do referable attributable attributable attributable attributable attributable attributable attributable attributable attributable rotund intervening calculations and rotund your confutations to 2 decimal places, e.g., 32.16.) NPV Best-case $ Worst-case $ Fin 301 HW 7

Question:

Fin 301 HW 7 Consider a purpose to furnish Detroit with 40,000 tons of deed screws per-annum control automobile consequenceion. You earn scarcity an primal $5,000,000 bombardment in threading equipment to procure the purpose started; the purpose earn ultimate control six years. The accounting line likes that annual unwandering consumes earn be $700,000 and that inconstant consumes should be $300 per ton; accounting earn underlike the primal unwandering asestablished bombardment straight-course to cipher balance the six-year purpose animation. It so likes a salvage prize of $600,000 behind dismantling consumes. The marketing line likes that the automakers earn suffer the abbreviate at a vending worth of $370 per ton. The engineering line likes you earn scarcity an primal intrap established cardinal bombardment of $500,000. You demand a revert of 15 percent and countenance a final duty scold of 30 percent on this purpose. a-1 What is the liked OCF control this purpose? (Do referable attributable attributable attributable attributable attributable attributable attributable attributable attributable rotund intervening calculations. Rotund your confutation to the unswerving sound sum, e.g., 32.) OCF $ a-2 What is the liked NPV control this purpose? (Do referable attributable attributable attributable attributable attributable attributable attributable attributable attributable rotund intervening calculations. Rotund your confutation to 2 decimal places, e.g., 32.16.) NPV $ b. Suppose you believe that the accounting line’s primal consume and salvage prize purposeions are accuscold simply to among ±15 percent; the marketing line’s worth like is accuscold simply to among ±10 percent; and the engineering line’s intrap established cardinal like is accuscold simply to among ±5 percent. What are your worst-case and best-case NPVs control this purpose? (Negative sums should be implied by a minus token. Do referable attributable attributable attributable attributable attributable attributable attributable attributable attributable rotund intervening calculations. Rotund your confutations to 2 decimal places, e.g., 32.16.) Worst-case $ Best-case $

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