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4. You are considering a new product launch. The project will cost $1.022.000, have a four-year life, and have no salvage value; depreciation is straight-line

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4. You are considering a new product launch. The project will cost $1.022.000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 400 units per year, price per unit will be $20,200, variable cost per unit will be 516,700, and fixed costs will be $338.000 per year. The required return on the project is 14 percent, and the relevant tax rate is 35 percent Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to within +10 percent. Required: (a) What are the best and worst case values for each of the projections? Scenario Unit sales Variable costs Fixed costs Base $16,700 $338.000 Best Worst b) What are the best and worst case CF and NPV, with these projections? 400 NPY Best-case Worst-case OCE $ $ $ le) What is the buse-case OCF and NPV? OCH NPV (d) What is the OCF and NPV with fixed costs of $348 000 per year OCF NPV (e) What is the sensitivity of the NPV to changes in fixed cost For every dollar in NPV alis by MacBook 20 dao con

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