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A company is considering a 5-year project that has the following information: initial investment $6,000,000; depreciation straight line; no salvage value; price per unit $300;
A company is considering a 5-year project that has the following information: initial investment $6,000,000; depreciation straight line; no salvage value; price per unit $300; variable cost per unit $200; fixed costs $1,000,000, quantity sold = 38,000 units; tax rate = 35%. If you require a 10% return, should the project be accepted? Suppose that the estimates are accurate to within +/- 10% for sales units and variable costs, what is your best-case NPV scenario for this project?
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