Project returns | mBA | University of nairobi

 

Mike has set up a new company and estimates that the cost of capital is 10%. His first project involves investing in $100,000 of equipment with a life of 10 years and a final scrap value of $10,000.
The equipment will produce 10,000 units p.a. generating a contribution of $2 each. He estimates that additional fixed costs will be $10,000 p.a.

Determine, on the basis of the above figures, whether the project is worthwhile
(4 Marks)
Calculate the sensitivity to change of:    
The initial investment
The sales volume p.a.
The contribution p.a.
The fixed costs p.a.
The scrap value
The cost of capital

Need your ASSIGNMENT done? Use our paper writing service to score better and meet your deadline.


Click Here to Make an Order Click Here to Hire a Writer