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Consider a project with a 5-year life. The initial cost to set up the project is $1,200,000. This amount is to be linearly depreciated to
Consider a project with a 5-year life. The initial cost to set up the project is $1,200,000. This amount is to be linearly depreciated to zero over the life of the project. You expect to sell the equipment for $240,000 after 5 years. The project requires an initial investment in net working capital of $120,000, which will be recouped at the end of the project. You estimated sales of 77,000 units per year at a price of $169 each. The variable cost per unit is estimated to be $135.2 and fixed costs are $240,000 per year. You expect unit sales, prices, variable and fixed costs to be within 15% of your estimates. The required return is 13% and the tax rate is 34%. Attempt 1/3 for 8 pts. Part 1 What is the NPV in the base case? + decimals B | Attempt 1/3 for 8 pts. Part 2 What is the NPV in the pessimistic case? 0+ decimals Submit | Attempt 1/3 for 8 pts. Part 3 What is the NPV in the optimistic case? 0+ decimals
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