Q1) The project produces a number of units needed for a power plant project for purposing of routine maintenance as shown in the following table: Sales Quantity 710 Thousands units Price for Sales Quantity Cost for Quantity Project life span (virtual) investment costs 11$ 9.5 $ 7 years 1330 Thousands $ 2 3 4 Note that (i= 9 %) for whole project life. Adopting of sensitive analysis to answer the following: 1) The test of the project net present value under the following situations: - A) current situation, B) under the economic changes: Reduced selling price per unit (10%). & (15%)increase in sales & 5% decrease in the cost of the unit produced. C) Draw a graphically for illustrating the two cases and explaining it from an economic point of view.
Q1) The project produces a number of units needed for a power plant project for purposing of routine maintenance as shown in the following table: Sales Quantity 710 Thousands units Price for Sales Quantity Cost for Quantity Project life span (virtual) investment costs 11$ 9.5 $ 7 years 1330 Thousands $ 2 3 4 Note that (i= 9 %) for whole project life. Adopting of sensitive analysis to answer the following: 1) The test of the project net present value under the following situations: - A) current situation, B) under the economic changes: Reduced selling price per unit (10%). & (15%)increase in sales & 5% decrease in the cost of the unit produced. C) Draw a graphically for illustrating the two cases and explaining it from an economic point of view.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Q1) The project produces a number of units needed for a power plant project for purposing of
routine maintenance as shown in the following table:
Sales Quantity
710 Thousands units
Price for Sales Quantity
Cost for Quantity
Project life span (virtual)
investment costs
11$
9.5 $
7 years
1330 Thousands $
1
3
4
Note that (i= 9 %) for whole project life.
Adopting of sensitive analysis to answer the following:
1) The test of the project net present value under the following situations: -
A) current situation,
B) under the economic changes: Reduced selling price per unit (10%). & (15%)increase in sales
& 5% decrease in the cost of the unit produced.
C) Draw a graphically for illustrating the two cases and explaining it from an economic point of
view.
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