Ms Thompson, as the CFO of a clock maker, is considering an investment of a $420,000 machine that has a seven year life and no salvage value. The machine is depreciated by a straight line method with zero salvage value over the seven years. The appropriate discount rate of cash flows of projectis 13%, and the corporate tax rate of the company is 35%. Evaluate the profitability of the project under the following scenario;

	Pessimistic	Expected	Optimistic
Unit sales	23,000	25,000	27,000
price	$38	$40	$42
Variable Costs	$21	$20	$19
Fixed Costs	$320,000	$300,000	$280,000