An investment of $80,000 today is expected to give rise to an annual contribution of $45,000. This is based on selling one product, a volume of 15,000 units, selling price of $16.50 and variable cost...


An investment of $80,000 today is expected to give rise to an annual contribution of $45,000. This is based on selling one product, a volume of 15,000 units, selling price of $16.50 and variable

cost of $12. Annual fixed cost of $11,000 will be incurred for the next four years; the discount

rate is 10%.
Required:
(a) Calculate the NPV of this investment.
(b) Calculate the sensitivity of your calculation to the discount rate.



Jun 07, 2022
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