University Canada West wants to invest in a New Post Graduate Program. The Project under consideration costs $27 Million, has a 9 (eight) years life, and has no salvage value. Depreciation is straight-line to zero. The required rate of return is 13%. Sales are projected at 12,000 students per year. Tuition Fees per student will be $7,500. Variable cost per student will be $3,250, and fixed costs are $8 Million per year. Tax rate is 33%. Ignore CCA.

 Your proposal should contemplate the following questions and problems:

 Suppose you think the number of students is accurate to within 15%. Calculate the upper and lower bounds for these projections. (BEST-case and WORST-case scenarios).

 Calculate the Base-case NPV and IRR (5,000 students/year).

Should UCW accept the project based on the base-case scenario?

 Calculate the BEST-case NPV and the WORST-case NPV and IRR

If you look at best and worst-case scenarios, what else should be considered? Will you change your recommendation and why?

 Calculate other project evaluation criteria

• Payback period
• discounted payback period
• Break even point
• profitability index,
• average accounting return

and explain what it means in terms of this project, how it will influence your decision.

Develop a proposal for this case. Write it in a business memo format. 

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