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:

Pre-Migration Labor Force

The workforce available in a region or country before significant migration flows occur.

Country of Origin

The country where goods were manufactured or produced, which can influence consumer perceptions and regulatory standards.

Labor Migration

The movement of workers from one area to another, often from one country to another, in search of better employment opportunities and living conditions.

Explicit Cost

Direct, out-of-pocket payments for goods or services used in the production of a product.