Variable Projection Camera Adapter Corporate Finance Past Exam Question, Please Kindly Help Me!!!?

Corporate finance past exam question, please kindly help me!!!? - variable projection camera adapter

The project will have cost $ 680,000 and has a term of four years of life and no salvage value, depreciation is the straight line to zero. Revenues are estimated at 160 units per year, the unit price will be $ 19,000, variable cost per unit is $ 14,000 and fixed costs are $ 150,000 per year. The required return on the project is 15% and the rate of tax in question is 35%. Assume that all cash sales, VC and FC in the cost.


(a) on your experience, I think that sales, variable costs and fixed costs projections given here are probably accurate to + - 10%. What are the upper and lower limits of projections? What is the base case NPV? What are the best and worst scenarios VAN?

(b) At the sensitivity of the base case NPV valuation to changes in fixed costs? (assuming that the fixed costs increase to $ 160,000).

(c) What is the breakdown of cash flows at the level of production (units) for this project (ignore taxes)?

(d) What is the balance between the quantity produced (units) for this project? What is the degree of operating leverage in the accountinBreakeven g? How do you interpret this number?