A project requires an initial investment of $150,000 and has an expected life of five years. The required rate of return on the project is 12% per annum.
The project’s estimated cash flows each year are as follows:
$000 Sales revenue 101 Variable costs 30 Incremental fixed costs 5
The selling price, costs and activity levels are expected to remain the same for each year of the project.
Ignore taxation and inflation.
Required: Calculate the percentage change in the selling price that would result in the project being rejected.
For a custom-written paper on the above topic, place your order now!
What We Offer
• On-time delivery guarantee
• PhD-level professionals
• Automatic plagiarism check
• 100% money-back guarantee
• 100% Privacy and Confidentiality
• High Quality custom-written papers
