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TTR Ltd plans to purchase a new plant for $1,000m on the 1st of January 20X6. The annual sales expected from the production of this plant is S400m per year. The plant has an expected life of five years. The financial accountant has computed the NPV of the project at $61.42m considering a discount rate of 10%. The marketing director wants to know the percentage drop in revenue that the sales team can afford before the project becomes unviable. Which of the following indicates the percentage required by the marketing
director?
Suggested Answer: A
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17 comments · newest first
EL
Elliott
11 months ago
I believe it's closer to 4.5% based on the numbers.
RA
Rana
11 months ago
4.05%? Really? That seems low for a project of this scale.
DA
Daren
11 months ago
Wait, how can they afford a 10% drop? That seems risky!
LA
Lawana
12 months ago
I think a 5% drop sounds about right.
DA
Daniela
12 months ago
The NPV is positive at $61.42m, so that's a good sign!
DO
Dominga
1 year ago
I vaguely remember that we need to consider the NPV and how much it can decrease before turning negative. I think the answer could be 4.05%?
VA
Vallie
1 year ago
I feel a bit uncertain about the exact percentage drop. I thought it was around 4.5%, but I can't recall the details clearly.
BU
Buck
1 year ago
This question seems similar to one we practiced about revenue drops affecting project viability. I think it might be around 5% based on my calculations.
QU
Quiana
1 year ago
I remember we discussed how to calculate the break-even point for projects, but I'm not sure how to apply that here with the NPV.
IL
Iluminada
1 year ago
Ah, I think I've got it. If the NPV is $61.42m, then the project is viable. To find the percentage drop in revenue that would make it unviable, I just need to find the revenue level that would result in an NPV of $0. Should be a simple calculation.
KE
Keneth
1 year ago
This seems straightforward enough. I'll start by calculating the NPV using the given information, then work out the percentage drop in revenue that would make the NPV zero. Should be a matter of some simple math.
RO
Rosalia
1 year ago
I'm a bit confused on how to approach this. The question is asking for a specific percentage, but I'm not sure how to get there from the information given. I'll need to review the NPV formula and see if I can figure out the right steps.
SH
Sherron
1 year ago
Okay, let's see. We have the initial cost of the plant, the expected annual sales, the project life, and the discount rate. I think I can use this to calculate the NPV and then work backwards to find the percentage drop in revenue.
FI
Filiberto
1 year ago
Hmm, this looks like a tricky NPV calculation question. I'll need to carefully review the information provided and think through the steps to determine the percentage drop in revenue.
RI
Rima
1 year ago
I've got this one! The answer is definitely Microsoft Power BI. The Data Warehouse is designed to integrate with Power BI, so that's the best tool to use for creating custom reports from the Intune data.
LA
Lachelle
1 year ago
I feel pretty confident about this one. Expressing empathy and letting the customer vent are both important ways to build trust and create a positive interaction, which is key for the Service Desk.
JA
Jacqueline
1 year ago
Wait, I'm a bit confused. Is it just the delete-config command, or do I need to do something else like reboot the system? I want to make sure I fully understand the steps required for a proper factory reset.