Question
Base Lower Upper Unit Sales 6,000 5,500 6,500 Price per unit 160 150 170 VC per unit 120 116 124 FC 100,000 90,000 110,000 The
| Base | Lower | Upper |
Unit Sales | 6,000 | 5,500 | 6,500 |
Price per unit | 160 | 150 | 170 |
VC per unit | 120 | 116 | 124 |
FC | 100,000 | 90,000 | 110,000 |
The Can-Do Co. is analyzing a proposed project. The company needs to purchase equipment with the initial cost of $400,000. The project has a 5-year life and equipment is straight-line depreciated to zero. At the end of the project, equipment is worth nothing. The required return is 12%, and the tax rate is 34%. Below are the possible values for unit sales, price per unit, variable cost (VC) per unit; and fixed cost. What is the NPV under the worst case scenario? PLEASE SHOW WORK
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