Question
We are evaluating a project that costs $2,010,000, has a 7-year life, and has no salvage value. Assume that depreciation is straight-line to zero over
We are evaluating a project that costs $2,010,000, has a 7-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 $38.61, variable cost per unit is $23.75, and fixed costs are $848,000 per year. The tax rate is 21 percent and we require a return of 12 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.
Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
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