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You have following assumptions for the investment project: • The i...
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You have following assumptions for the investment project:
• The initial cost of fixed assets is $600,000. The project has a 3-year life. There is no salvage
• Investment in inventory required is $100,000 (to be regained in 3 years).
• Discount rate (Required return) is 20%.
• ax rate
• Estimated sales volume, price and costs for the base-case scenario are:
Project information
|
Base case scenario
|
Sales Volume (units)
|
1,000,000
|
Price ($ per unit)
|
6.00
|
Variable Cost ($ per unit)
|
0.60
|
Fixed Cost per year ($)
|
50,000
|
You assume that in the worst-case scenario the sales volume is only 700,000 units.
What is the sensitivity of the project’s Net Present Valu to changes in sales volume?
Give the answer in dollars per unit, rounding the final result to the nearest dollar, with no decimal places (e.g., if the answer would be $70.34 per unit, give 70; or if the answer would be $79.58 per unit, give 80).