Question
A project under consideration costs $750,000, has a five-year life and has no salvage value. Depreciation is Straight-Line to zero and the Tax Rate is
A project under consideration costs $750,000, has a five-year life and has no salvage value. Depreciation is Straight-Line to zero and the Tax Rate is 34 percent. Sales are projected at 500 units per year. Price per unit is $2,500, Variable Cost per unit is $1,500, and Fixed Costs are $100,000 per year. Suppose you think that the unit sales, price, variable cost, and fixed cost projections given here are accurate to within 10 percent either way. What is the worst-case scenario net income? what is the best case and net income?
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