Economics Homework Help

TB 0343 Thunderbird Potential Rental Value of the Unoccupied Annex Worksheet

 

Assignment Questions:

1.What are the relevant cash flows? In this capital budgeting analysis of their low-price, low-calorie soda project. how shale we treat:

  • the consultant’s market study
  • the potential rental value of the unoccupied annex
  • the interest charges
  • working capital
  • 2.Should we consider the erosion of the existing product – regular soda – in the analysis?

    3.Calculate the project’s NPV, IRR, payback period, discounted payback period, and profitability index.

    4.Perform sensitivity analysis on sales volume, price, direct labor, materials, and energy cost. What do you observe?

    5.What are the benefits and risks of undertaking the project?

    6.Should Bebida Sol undertake the project?