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1 . A project costs $ 4 5 0 , 0 0 0 . It has a 1 0 - year useful life and no

1. A project costs $450,000. It has a 10-year useful life and no salvage value. Depreciation is straight-line to zero over the life of the project. The tax rate is 34% and the required return for the project is 14%(assume no debt). You have the following estimates for the base-case and you believe the estimates are accurate to +/-15%:Unit sales: 2,000Price/unit: 350VC/unit: 230FC/year: 50,000
What is the VC/unit number you would use when determining the best-case scenario?
2. A project costs $450,000. It has a 10-year useful life and no salvage value. Depreciation is straight-line to zero over the life of the project. The tax rate is 34% and the required return for the project is 14%(assume no debt). You have the following estimates for the base-case and you believe the estimates are accurate to +/-15%:Unit sales: 2,000Price/unit: 350VC/unit: 230FC/year: 50,000
What is the Unit sales number you would use when determining the worst-case scenario?
3. A project costs $450,000. It has a 10-year useful life and no salvage value. Depreciation is straight-line to zero over the life of the project. The tax rate is 34% and the required return for the project is 14%(assume no debt). You have the following estimates for the base-case and you believe the estimates are accurate to +/-15%:Unit sales: 2,000Price/unit: 350VC/unit: 230FC/year: 50,000
Calculate the worst-case NPV.
4. A project costs $450,000. It has a 10-year useful life and no salvage value. Depreciation is straight-line to zero over the life of the project. The tax rate is 34% and the required return for the project is 14%(assume no debt). You have the following estimates for the base-case and you believe the estimates are accurate to +/-15%:Unit sales: 2,000Price/unit: 350VC/unit: 230FC/year: 50,000
The base-case NPV is 283,907.4714. Calculate the sensitivity of the projects NPV to changes in unit sales.
5. A project costs $450,000. It has a 10-year useful life and no salvage value. Depreciation is straight-line to zero over the life of the project. The tax rate is 34% and the required return for the project is 14%(assume no debt). You have the following estimates for the base-case and you believe the estimates are accurate to +/-15%:Unit sales: 2,000Price/unit: 350VC/unit: 230FC/year: 50,000
Using your unrounded answer in question #3, what would be the projects NPV if you were able to sell 200 fewer units?
6. A project costs $450,000. It has a 10-year useful life and no salvage value. Depreciation is straight-line to zero over the life of the project. The tax rate is 34% and the required return for the project is 14%(assume no debt). You have the following estimates for the base-case and you believe the estimates are accurate to +/-15%:Unit sales: 2,000Price/unit: 350VC/unit: 230FC/year: 50,000
The base-case NPV is 283,907.4714. Calculate the sensitivity of the projects NPV to changes in VC/unit.
7. A project costs $450,000. It has a 10-year useful life and no salvage value. Depreciation is straight-line to zero over the life of the project. The tax rate is 34% and the required return for the project is 14%(assume no debt). You have the following estimates for the base-case and you believe the estimates are accurate to +/-15%:Unit sales: 2,000Price/unit: 350VC/unit: 230FC/year: 50,000
Using your unrounded answer in question #5, what would be the projects NPV if VC/unit is $255 instead of $230?

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