Question
We are evaluating a project that cost $1,422,000, has six year life and has no salvage value. Assume that depreciation is straight line zero over
We are evaluating a project that cost $1,422,000, has six year life and has no salvage value. Assume that depreciation is straight line zero over the life of the project. Sales are projected at $88,200 units per year. Price per unit is $34.85, variable cost per unit is $21.10, and fixed costs are $762,000 per year. The tax rate is 35 percent, and we require a return of 11 percent on the project. Required: 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
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