You are considering a new automotive product line in the firm’s business portfolio. The project will cost $ 2.170 billion and have a five-year life with no salvage value; depreciation is straight-line to zero. Sales are projected at 220 units per year; price per unit will be $ 19.70 million, variable cost per unit will be $ 12.80 million, and fixed costs will be $ 590.00 million per year. The required return on the project is 8%, and the relevant tax rate is 21%.   Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to within ±10%. What is the base-case NPV? What is the best-case NPV? What is the worst-case NPV?

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Q: our firm is cons

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A:

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Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.