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Consider a project with a 4-year life. The initial cost to set up the project is $100,000. This amount is to be linearly depreciated to
Consider a project with a 4-year life. The initial cost to set up the project is $100,000. This amount is to be linearly depreciated to zero over the life of the project and there is no salvage value. The required return is 12% and the tax rate is 34%. You've collected the following estimates: Base case Pessimistic Optimistic Unit sales per year (Q) 5,000 9,000 7,000 Price per unit (P) 40 50 60 Variable cost per unit (VC) 20 35 15 Fixed costs per year (FC) 30,000 50,000 20,000 Attempt 1/5 for 10 pts. Part 1 What is the annual free cash flow in the base case? No decimals Submit Attempt 1/5 for 10 pts B Part 2 What is the NPV in the base case? No decimals Submit O 8 Attempt 1/5 for 10 pts. Part 3 What is the NPV in the pessimistic case? No decimals Submit Attempt 1/5 for 10 pts. Part 4 What is the NPV in the optimistic case? No decimals Submit
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