You are given the following forecasted data about a project • Project life = 3 years Required investment $1,200,000 • Salvage value $200,000 • Depreciation method straight-line depreciation • Unit price $140 • First year's demand 100,000 units Annual demand growth rate % • Unit variable cost $80 Annual fixed cost $10,000 • Income tax rate 40% • MARR 10 Suppose the key variable is identified here to be the first year's demand. This variable's most likely value is 100,000 units (as indicated above), but what would happen to the NPW if it were 120,000 units instead? The change in the NPW values (new NPW-original NPW) is closest to:

You are given the following forecasted data about a project • Project life = 3 years Required investment $1,200,000 • Salvage value $200,000 • Depreciation method straight-line depreciation • Unit price $140 • First year's demand 100,000 units Annual demand growth rate % • Unit variable cost $80 Annual fixed cost $10,000 • Income tax rate 40% • MARR 10 Suppose the key variable is identified here to be the first year's demand. This variable's most likely value is 100,000 units (as indicated above), but what would happen to the NPW if it were 120,000 units instead? The change in the NPW values (new NPW-original NPW) is closest to:

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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(4) Evaluate the ROI.
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