A Project Costs $2

question 103

Multiple Choice

A project costs $2.43 million and has no salvage value.Depreciation is straight-line to zero over the five-year life of the project.Sales are projected at 64,000 units per year, price per unit is $73.29, variable cost per unit is $42.93, and fixed costs are $623,000 per year.The tax rate is 35 percent, and the required rate of return is 11percent.What is the sensitivity of NPV to a 100-unit increase in the sales figure?

• A)$9,198.40
• B)$8,609.18
• C)$8,097.40
• D)$7,293.48
• E)$7,557.12

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Definitions:

Surface

The outermost or uppermost layer of something that is in contact with the air.

Insight-focused

A therapy approach emphasizing understanding the underlying causes of one's problems or behaviors.

Interpretation

The act of explaining or giving meaning to something, often involves translating words or considering the significance of actions or events.

Behavioral

Pertaining to the actions or reactions of persons or organisms in response to external or internal stimuli.