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P11-6 Scenario Analysis [LO2] We are evaluating a project that costs $978,000, has an seven-year life, and has no salvage value. Assume that depreciation is
P11-6 Scenario Analysis [LO2] We are evaluating a project that costs $978,000, has an seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 112,000 units per year. Price per unit is $40, variable cost per unit is $27, and fixed costs are $989,736 per year. The tax rate is 33 percent, and we require a 17 percent return on this project. The projections given for price, quantity variable costs, and fixed costs are all accurate to within 12 percent. Required (a) Calculate the best-case NPV. (Do not round your intermediate calculations.) (Click to select) 7 b) Calculate the worst-case NPV. (Do not round your intermediate calculations.) (Click to select)
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