Question: The most likely outcomes for a particular project are estimated as follows: Unit price $ 46 Variable cost $ 25 Fixed cost $ 290,000 Expected
The most likely outcomes for a particular project are estimated as follows:
| Unit price | $ | 46 | |
| Variable cost | $ | 25 | |
| Fixed cost | $ | 290,000 | |
| Expected sales | 31,200 | units per year | |
However, you recognize that some of these estimates are subject to error. Suppose that each variable may turn out to be either 5% higher or 5% lower than the initial estimate. The project will last for 13 years and requires an initial investment of $1.3 million, which will be depreciated straight-line over the project life to a final value of zero. The firm's tax rate is 35% and the required rate of return is 11%. What is project NPV in the "best case" scenario, that is, assuming all variables take on the best possible value? (Round your answer to the nearest whole dollar amount.)
| NPV in the "best case" scenario | $ |
What about the "worst case" scenario? (Use the minus sign for negative values. Round your answer to the nearest whole dollar amount.)
| NPV in the "worst case" scenario | $ |
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