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We are evaluating a project that costs $2,040,000, 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 $2,040,000, 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 89,700 units per year. Price per unit is $38.67, variable cost per unit is $23.80, and fixed costs are $851,000 per year. The tax rate is 22 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 \pm 10 percent. Calculate the best-case and worst-case NPV figures. Note: A negatlve answer should be Indlcated by a minus sign. Do not round Intermedlate caleulatlons and round your answers to 2 declmal places, e.g., 32.16. Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fixed asset investment of $2,350,000. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be worthless. The project is estimated to generate $2,470,000 in annual sales, with costs of $1,490,000. If the tax rate is 24 percent, what is the OCF for this project? Note: Do not round Intermedlate calculatlons and round your answer to 2 declmal places, e.g., 32.16
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