Consider a project with a 5-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 13% and the tax rate is 34%.

The price per unit is $50, variable costs are $20 per unit and fixed costs are $30,000 per year. You've collected the following estimates for unit sales:

Base case Pessimistic Optimistic Unit sales per year (Q) 7,000 5,000 9,000 Attempt 1/20 for 10 pts. Part 1 What is the NPV in the base case?

Part 2 What is the NPV in the pessimistic case?

Part 3 What is the NPV in the optimistic case?