Question
We are evaluating a project that costs $1,694,000, has a seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over
We are evaluating a project that costs $1,694,000, has a seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 88,700 units per year. Price per unit is $35.10, variable cost per unit is $21.35, and fixed costs are $767,000 per year. The tax rate is 40 percent, and we require a return of 12 percent on this 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. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places (e.g., 32.16).) |
NPV | |
Best-case | $ |
Worst-case | $ |
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