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3 Problem - Scenario Analysis 25 points The following are the most likely outcomes for a particular project: Unit price: Variable cost: Fixed cost: Expected
3 Problem - Scenario Analysis 25 points The following are the most likely outcomes for a particular project: Unit price: Variable cost: Fixed cost: Expected sales: $ 50 $ 30 $490,000 48,000 units per year eBook Print The project manager, on the other hand, realizes that some of these estimates are prone to inaccuracy. Assume that each variable will either be 10% percent higher or 10% percent lower than the initial estimate. The project will last 10 years and necessitates an initial investment of $2.3 million, which will be depreciated straight-line during the entire project life to a final value of 0. The tax rate for the company is 21%. (A negative quantity should be expressed by a minus sign. Fill in the blanks with your response in dollars, not millions. Intermediate calculations should not be rounded. Your response should be rounded to the closest dollar amount.) References a. Calculate the project's net present value (NPV) under the best-case scenario, assuming all variables have the best possible value. Assume that the required rate of return is 10%. b. Calculate the project's net present value (NPV) under the worst-case scenario, assuming all variables have the worst possible value. Assume that the required rate of return is 10%. a. NPV b. NPV Mc
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