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Expected sales: 55,000 units per year Unit price: $100 Variable cost: $60 Fixed cost: $1,650,000 The project will last for 10 years and requires an
Expected sales: 55,000 units per year Unit price: $100 Variable cost: $60 Fixed cost: $1,650,000 The project will last for 10 years and requires an initial investment of $1.52 million, which will be depreciated straight-line over the project life to a final value of zero. The firm's tax rate is 30%, and the required rate of return is 12%. However, you recognize that some of these estimates are subject to error. In one scenario a sharp rise in the dollar could cause sales to fall 30% below expectations for the life of the project and, if that happens, the unit price would probably be only $90. The good news is that fixed costs could be as low as $1,100,000, and variable costs would decline in proportion to sales. o. What is project NPV if all variables are as expected? Note: Do not round Intermedlete coleulatlons. Enter your answer In thousands not In millilons and round your answer to the nearest whole dollar amount. b. What is NPV in the bad-case scenario? Note: Do not round Intermedlete colculatlons. Enter your answer In thousands not In millilons and round your answer to the nearest whole dollar amount. Negatlve amount should be Indleated with a minus sign. Answer is complete but not entirely correct
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