9.9
| Chapter 9 | |||
| Question 9 | |||
| Input area: | |||
| Sales price | $ 52.25 | ||
| Variable costs | $ 14.60 | ||
| Fixed costs | $ 580,000 | ||
| Depreciation | $ 65,000 | ||
| Tax rate | 21% | ||
| Discount rate | 13% | ||
| Initial investment | $ 455,000 | ||
| Life of project | 7 | ||
| Output area: | Complete the empty boxes below. | ||
| Accounting breakeven | |||
| EAC | |||
| Financial breakeven |
9.12
| Chapter 9 | |||||
| Question 12 | |||||
| Input area: | |||||
| Initial fixed assets | $ 385,000 | ||||
| Life of project (yrs) | 4 | ||||
| Price | $ 26 | ||||
| Variable costs | $ 17 | ||||
| Fixed costs | $ 395,000 | ||||
| Quantity sold | 73,000 | ||||
| Tax rate | 22% | ||||
| Change in quantity | 1,000 | ||||
| Output area: | Complete the empty boxes below. | ||||
| OCF at | units | ||||
| OCF at | units | ||||
| Cash flow sensitivity |
9.21
| Chapter 9 | ||||||||||
| Question 21 | ||||||||||
| Input area: | ||||||||||
| Cash offered today | $ 50,000 | |||||||||
| Percentage of profits offered | 1% | |||||||||
| Probability script is bad | ||||||||||
| and is not made into a movie | 90% | |||||||||
| Probability a movie is made | ||||||||||
| and the movie is bad | 70% | |||||||||
| Payoff if movie is good | $ 120,000,000 | |||||||||
| Output area: | Complete the empty boxes below. | |||||||||
| Value if movie is good and there is a big audience | ||||||||||
| Value if movie is good, there is a big audience, and the script is good | ||||||||||
| Percentage of profits if movie is good, there is a big audience, and the script is good | ||||||||||
| Big audience | ||||||||||
| Probability = | Payoff = | |||||||||
| Movie is good | ||||||||||
| Probability = | Make movie | |||||||||
| Script is good | Movie is bad | |||||||||
| Read script | Probability = | Small audience | ||||||||
| Script is bad | Payoff = | |||||||||
| Probability = | Don’t make movie | |||||||||
| No profit | ||||||||||
| The screenwriter should take |
9.25
| Chapter 9 | |||||
| Question 25 | |||||
| Input area: | |||||
| Life of project | 5 | ||||
| Discount rate | 13% | ||||
| Tax rate | 23% | ||||
| Pessimistic | Expected | Optimistic | |||
| Market size | 81,000 | 97,000 | 112,000 | ||
| Market share | 14% | 17% | 19% | ||
| Selling price | $ 110 | $ 116 | $ 119 | ||
| Variable costs per year | $ 38 | $ 36 | $ 34 | ||
| Fixed costs per year | $ 615,000 | $ 575,000 | $ 550,000 | ||
| Initial investment | $ 1,550,000 | $ 1,450,000 | $ 1,350,000 | ||
| Output area: | Complete the table below. | ||||
| Pessimistic | Expected | Optimistic | |||
| Units per year | |||||
| Revenue | |||||
| Variable costs | |||||
| Fixed costs | |||||
| Depreciation | |||||
| EBT | |||||
| Tax | |||||
| Net income | |||||
| OCF | |||||
| NPV |
