Your company generates revenues of $5 million per year. Next year, company may get a long-term large contract, which will either increase by 15% or decrease by 20% (if contract is not signed) with equal probability. The new revenue will stay at that level forever. Operating costs are at $2 million dollars per year. You can sell the company at any time to $7 million and your cost of capital is 10%. What will be the value of your company if it gets the contract and the sales increase by 15%?

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Q: net present value

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A: Given: Initial investment = $100,000 Cash inflows = $25,000 Cost of capital = 17%

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A: Referencehttps://www.investopedia.com/terms/n/npv.asp

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Q: How many of their products do they need to sell to break even financially?

A: To calculate the break-even point in units, you can use the following formula:

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.