Business
Business, 26.08.2021 15:40, nettyshaf202406

A company is considering an investment with the following financial information: initial investment is $800,000, project life is 5 years, salvage value is $50,000, unit price is $45/unit, unit variable cost is $18/unit, and fixed annual cost is $320,000. It is estimated that the annual sales volume will be 25,000 units. MARR is 11%. The company is concerned about the impact of sales volume on the project's rate of return. a. Please conduct a sensitivity analysis and determine the IRR if the annual sales volume changes by the following percentages from the initial estimate: -60% -40% -20% 0% +20% +40% +60%
b. Determine the percentage change that causes a reversal in the decision regarding the attractiveness of the project.

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