Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please show using excel formulas 1 We are evaluating a project that costs $845,000, has an eight-year life, and has no salvage value. Assume that
please show using excel formulas
1 We are evaluating a project that costs $845,000, has an eight-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 51,000 units per year. Price per unit is $53, variable cost per unit is $27, and fixed costs are $950,000 per year. The tax rate is 22 percent, and we require a return of 10 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within \pm 10 percent. Calculate the best-case and worst-case NPV figures. 3 Input area: \begin{tabular}{lr|} \hline Initial cost & $845,000 \\ Project life & 8 \\ Units sales & 51,000 \\ Price per unit & $53 \\ Variable cost per unit & $27 \\ Fixed costs & $950,000 \\ Tax rate & 22% \\ Required return & 10% \\ Price uncertainty & 10% \\ Quantity uncertainty & 10% \\ Variable cost uncertainty & 10% \\ Fixed cost uncertainty & 10% \\ \hline \end{tabular} (Use cells A6 to B17 from the given information to complete this question. You must use the built-in Excel function to answer this question. The OCF must be calculated using the depreciation tax shield approach.) Output areaStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started