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ok Consider a project to supply Detroit with 31,000 tons of machine screws annually for automobile production. You will need an initial $6,200,000 investment in

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ok Consider a project to supply Detroit with 31,000 tons of machine screws annually for automobile production. You will need an initial $6,200,000 investment in threading equipment to get the project started; the project will last for 5 years. The accounting department estimates that annual fixed costs will be $1,500,000 and that variable costs should be $285 per ton; accounting will depreciate the initial fixed asset investment straight-line to zero over the 5-year project life. It also estimates a salvage value of $875,000 after dismantling costs. The marketing department estimates that the automakers will let the contract at a selling price of $404 per ton. The engineering department estimates you will need an initial networking capital investment of $600,000. You require a return of 13 percent and face a tax rate of 24 percent on this project a-1. What is the estimated OCF for this project? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) 2- What is the estimated NPV for this project? (Do not round intermediate calculations 2. and round your answer to 2 decimal places, e.g.. 32.16.) b. Suppose you believe that the accounting department's initial cost and salvage value projections are accurate only to within 115 percent; the marketing department's price estimate is accurate only to within 410 percent; and the engineering department's net working capital estimate is accurate only to within t5 percent. What are your worst case and best-case NPVs for this project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) nt ances 3-1. OCF a-2. NPV b. Worst-case NPV Best case NPV

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