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Using excel functions Peabody Corporation has the following base-case estimates for its new small engine assembly project: - Price per unit $500 Variable costs =
Using excel functions
Peabody Corporation has the following base-case estimates for its new small engine assembly project: - Price per unit $500 Variable costs = $120 per unit Fixed costs = $2.5 million Demand 20,000 units per year Capital investment = $8 million at year 0 Product life = 8 years Salvage value = $500,000 Depreciation method = seven-year MACRS Tax rate = 35% . MARR: 12% Suppose the company believes that all of its estimates (except the product life, depreciation method, tax rate, and MARR) are accurate only to within 20%. a. What is the NPW of the project based on its base-case scenario? b. What is the NPW of the project based on its best-case scenario? C. What is the worst-case scenario? d. What conclusion would you make about the project after seeing the scenario analysesStep by Step Solution
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