Problem $7-2$ Scenario Analysis

References

We are evaluating a project that costs $$800,000,$ has a life of $8$ years, and has no

salvage value. Assume that depreciation is straight$-$line to zero over the life of the

project. Sales are projected at $60,000$ units per year. Price per unit is $$40,$ variable cost

per unit is $$20,$ and fixed costs are $$800,000$ per year. The tax rate is $21$ percent, and we

require a return of $11$ percent on this project. Suppose the projections given for price,

quantity, variable costs, and fixed costs are all accurate to within $+-10$ percent. Calculate

the best$-$case and worst$-$case NPV figures. $($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$.,32\mathrm{.}16.)$