Question
We are evaluating a project that costs $1,890,000, has a 6-year life, and has no salvage value. Assume that depreciation is straight-line to zero over
We are evaluating a project that costs $1,890,000, has a 6-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 89,400 units per year. Price per unit is $38.37, variable cost per unit is $23.55, and fixed costs are $836,000 per year. The tax rate is 22 percent and we require a return of 9 percent on this project. |
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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