A Video Rental Store Will Cost $650,000 to Open $\pm$ 0% from Their Original Estimates

question 86

Essay

A video rental store will cost $650,000 to open.Assuming annual sales of $1 million,variable costs of 35%,fixed costs of $300,000,depreciation of $100,000,and a tax rate of 35%,calculate the NPV of the project over a 10-year horizon (no inflation or salvage value assumed)with a 12% cost of capital.Conduct a sensitivity analysis by allowing investment,sales,variable costs,and fixed costs to vary by $\pm$ 0% from their original estimates.Which variable appears to affect profitability the most?

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Definitions:

Global Managers

Professionals who manage business operations across different countries and cultures, often dealing with international markets.

Cultural Backgrounds

The various social, religious, ethnic, and cultural influences that contribute to an individual's unique worldview and approach to life.

Insourcing

Job creation through foreign direct investment.

Foreign Direct Investment

Investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets.