We Are Evaluating a Project That Costs $1

question 57

Multiple Choice

We are evaluating a project that costs $1.68 million,has a five-year life,and has no salvage value.Assume depreciation is straight-line to zero over the life of the project.Sales are projected at 82,000 units per year.Price per unit is $43.29,variable cost per unit is $22.18,and fixed costs are $623,000 per year.The tax rate is 34 percent,and we require a 10 percent return on this project.What is the sensitivity of NPV to a 100-unit change in the sales figure?

• A)$3,998.40
• B)$4,609.18
• C)$4,897.20
• D)$5,281.55
• E)$5,557.12

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Definitions:

Balancing Demands

The process of managing various expectations or requirements from different aspects of one's life or job.

On-site Day Care

Child care services provided at the workplace, allowing employees to bring their children to a convenient location near them during work hours.

Inflexible Working Hours

A rigid schedule that does not allow variation in work time.

Extrinsic Factors

External influences or circumstances that can affect an individual's motivation, behavior, and conditions without being inherent to the task or subject itself.