G the total sales from 10 to 30 they noted that the

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*change any of the variables - one at a time to see what the change is in NPV Change in NPV +/-10% in Sales +/-12.24% +/-20% in Sales +/-24.48% +/-30% in Sales +/- 36.72% +/-10% in Price +/- 24.9% +/-20% in Price +/- 49.8% +/-30% in Price +/- 74.7% +/-10% in Variable Cost +/- 10.44% +/-20% in Variable Cost +/- 20.87% +/-30% in Variable Cost +/- 31.31% 10 34,000 34,000 900 30,600,000 13,600,000 1,500,000 120,000 - 15,380,000 5,229,200 10,150,800 10 10,150,800 1,530,000 1,552,500 2,640,000 14,343,300 ous ones that
Q4: How should the annual interest expenses of $400,000 be treated? Explain.
ded in the uld be atement. . It is not cash mpares the cash
Q5: Using the base case estimates calculate the cash, accounting, and financial breakeve Year 0 1 2 3 Sales (units) 30,000 34,000 38,800 Unit Sales Price 1,000 1,000 1,000 Revenues 30,000,000 34,000,000 38,800,000 Variable Cost 12,000,000 13,600,000 15,520,000 Fixed Costs 1,500,000 1,500,000 1,500,000 Rent ($10,000 per month) 120,000 120,000 120,000 MACRS Rates 14.29% 24.49% 17.49% Depreciation 2,858,000 4,898,000 3,498,000 EBIT 13,522,000 13,882,000 18,162,000 Taxes 4,597,480 4,719,880 6,175,080 Net Income 8,924,520 9,162,120 11,986,920 Year 0 1 2 3 OCF 11,782,520 14,060,120 15,484,920 Net Working Capital 900,000 1,500,000 1,700,000 1,940,000 (900,000) (600,000) (200,000) (240,000) NCS (20,000,000) CFFA (20,900,000) 11,182,520 13,860,120 15,244,920 Financial Break-Even Calculation Initial Outlay(including NWC) $ (20,900,000.00) PV of (Salvage Value + NWC) $1,130,900.92 Net Investment $ (19,769,099.08) * amount you would have to spend today OCF* $3,790,003.98 Year 1 2 3 Accounting BE 7,263 10,663 8,330 Cash BE 2,500 2,500 2,500 Financial BE 8,817 8,817 8,817 Financial BE > Accounting BE>Cash BE in NWC Accounting Breakeven(BE): The accounti exactly zero profits, given a certain amoun net income would zero at sales average of level, the project would seem acceptable. for here. Cash BE helps deteremine the point as which t equals zero. Operating cash flow (OCF) is a me
equals zero. Operating cash flow (OCF) is a me operations. If the OCF is negative, that means the project options need to be considered. This method d breakeven to average of 2,741 mowers to have mowers should go to full scale production I wo The financial BE point is a more comprehensiv to be equal to zero. This calculation shows tha breakeven. I would continue with this project.

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