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13. Project Analysis You are considering a new product launch. The project will cost $ | JETS million. 22 have a fouryear life, and have
13. Project Analysis You are considering a new product launch. The project will cost $ | JETS million. 22 have a fouryear life, and have no salvage value: depreciation is straightline to zero. Sales are projected at [95 units per year; price per unit vrn'll be $16,300; variable cost per unit will be $9.400; and xed costs will be $550000 per year. The required return on the project is I2 percent and the relevant tax rate is 2| percent. a. Based on your experience. you think the unit sales. variable cost, and xed cost projections. given here are probably accurate to within :10 percent. TWhat are the upper and lower bounds for these projections? What is the basecase NPR"? 'What are the bestcase and worst-case scenarios? I}. Evaluate the sensitivity ofvour basecase NP\":r to changes in xed costs. e. What is the accounting breakeven level of output for this project
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