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Imagine your company is interested to acquire a company (or a product line) whi...

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Imagine your company is interested to

acquire a company (or

a product line) which is currently making an annual

revenues of $9 million with expenses of $13.5 million.  Statistics show that the company’s annual

revenues and expenses are increasing at the annual rate of 15% and 4%,

respectively.  

Please determine the following using Excel WhatIF Analysis :

(i)  the break even point of this investment (1 mark). Please discuss the findings (0.5 mark)

(ii) the sensitivity and effect of both revenues and expenses on the breakeven period if the revenues increase from 10% to 40% with an annual increase of 5% and expenses increase from 2% to 12% with an annual increase of 2% (1.2% marks). Please discuss the findings (0.5 mark). 

Please prepare and submit your responses as a form of MS EXCEL spreadsheet. 

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