You Are Considering a New Product Launch

question 41

Multiple Choice

You are considering a new product launch.The project will cost $630,000,have a 5-year life,and have no salvage value; depreciation is straight-line to zero.Sales are projected at 160 units per year,price per unit will be $24,000,variable cost per unit will be $12,000,and fixed costs will be $283,000 per year.The required return is 12 percent and the relevant tax rate is 34 percent.Based on your experience,you think the unit sales,variable cost,and fixed cost projections given here are probably accurate to within ±9 percent.What is the worst case NPV?

• A)$3,417,907
• B)$2,573,269
• C)$888,618
• D)$3,102,134
• E)$3,458,020

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Definitions:

Similarity Principle

The similarity principle posits that individuals are more likely to form and maintain relationships with others who are similar to them in various aspects.

Complementarity Principle

A concept suggesting that relationships are strongest and most stable when partners possess traits that complement or enhance each other's abilities or characteristics.

Group Formation

The process by which individuals come together to form a group, often going through various stages of development such as forming, storming, norming, and performing.

Elaboration Principle

A concept in instructional design that emphasizes the importance of detailed and well-explained information to facilitate learning and understanding.