a1projectfx1b

a1projectfx1b - Autumn 2011 Managerial Finance Prof...

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Autumn 2011 Managerial Finance Prof. Francisco Pérez-González Callaway Golf FX-l Case: Part B. Read and prepare the following assignment: Having completed your preliminary analysis of the FX-1 project. A senior VP looks it over and quips, “The problem with NPV is we have no idea if any of the numbers in this analysis are right; indeed, I can guarantee you that almost all of them will turn out to be wrong!” While you agree that there is a fair amount of uncertainty about the projections, you also believe the NPV approach can help quantify the consequences of that uncertainty in a meaningful way. You go back to the feasibility study and find the following best and worst case estimates: Questions: 1. What is the break-even initial sales volume ? (That is, at what level of initial sales will the NPV = 0, if all other assumptions about the project
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