Below is the information on a project that you are evaluating for deciding on its worthiness as an investment. ABC company is considering a new investment whose data are shown below. WACC for the...

Extracted text: Below is the information on a project that you are evaluating for deciding on its worthiness as an investment. ABC company is considering a new investment whose data are shown below. WACC for the project under consideration Net investment in fixed assets (immediate) Required new working capital (immediate) Working capital from the end of the first year onwards as a Percentage of Sales Straight line deprec. Rate (every year end from the end of year 1} Sales revenues (starting at the end of year 1) Operating cost excluding depreciation, (starting at the end of year 1) 10% 75000 15000 25% 33.33% 75000 25000 Tax Rate Annual increase in Operating Costs each year from year 2 onwards Annual increase in Sales revenue from the end of the year 2 onwards Depreciation: Fixed assets to be fully depreciated in books using the straight line method over 4 years to zero Salvage value of the fixed assets at the end of the project life 35% 6% 9750


Extracted text: Consider the data given in Section 1: Between Changes in Sales and Changes in Operating costs, to which variable the NPV is more sensetive and how does it relate? Changes in Sales Revenue (Negatively related) Changes in Operating Cost (Negatively related) Changes in Sales Revenue (Positively related) O NPV is not sensetive to changes in either NPV is equally sensetive to changes in either O Changes in Operating Cost (Positively related)