A company planning to market a new model of motor scooter analyzes the effect of changes in the selling price of the motor scooter, the number of units that will be sold, and the cost of making the motor scooter on the estimated net present value (NPV) of the project. They predict that the break-even point for sales price for the motor scooter is $2,480. What does this mean?- ○ If the motor scooter is sold for $2,480, then the project will make a profit.- ○ The net present value (NPV) of the project equals zero at the sale price of the motor scooter equal to $2,480.- ○ At the price of $2,480, the revenue for the scooter will exactly equal its production cost.- ○ The predicted selling price of the motor scooter is $2,480.- ○ The maximum that the motor scooter can sell for and still make the project have a positive net present value (NPV) is $2,480.

Breakeven point :- Breakeven point means when Cost of production plus fixed expense or total…

Answered: A company planning to market a new…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Sampson Corporation is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are shown next: Possible Market Reaction Low response Moderate response High response Very high response Sales in Units 40 Probabilities 0.30 70 0.20 90 120 0.20 0.30 a. What is the expected value of unit sales for the new product? Note: Do not round Intermediate calculations and round your answer to the nearest whole unit.) Answer is complete but not entirely correct. Expected value 70 units b. What is the standard deviation of unit sales? Note: Do not round Intermediate calculations. Round your answer to 2 decimal places. Answer is complete but not entirely correct. Standard deviation 19.24 units
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