Juhari Berhad plans to introduce a new innovative project at Johor Bahru. The cost of the project is RM800,000 and it will be depreciated over a five-year period on the straight-line basis to zero value. The company expects to sell 250 units per year at RM20,000 per unit. The variable cost per unit and fixed cost are RM16,000 and RM130,000 respectively. There is no salvage value at the end of the useful life. Your required rate of return on new project is 18 percent and tax rate is 35 percent. Calculate; ii) Calculate the sensitivity of the base case Net Present Value (NPV) to change in unit price to RM21,000.

Juhari Berhad plans to introduce a new innovative project at Johor Bahru. The cost of the project is RM800,000 and it will be depreciated over a five-year period on the straight-line basis to zero value. The company expects to sell 250 units per year at RM20,000 per unit. The variable cost per unit and fixed cost are RM16,000 and RM130,000 respectively. There is no salvage value at the end of the useful life. Your required rate of return on new project is 18 percent and tax rate is 35 percent. Calculate; ii) Calculate the sensitivity of the base case Net Present Value (NPV) to change in unit price to RM21,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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