Question
We are evaluating a project that costs $2,250,000, has a life of 8 years, and has no salvage value. Assume that depreciation is straight-line to
We are evaluating a project that costs $2,250,000, has a life of 8 years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 94,900 units per year. Price per unit is $39.09, variable cost per unit is $24.15, and fixed costs are $872,000 per year. The tax rate is 24 percent, and we require a return of 11 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.
OCF
Best-case
Worst-case
NPV
Best-case
Worst-case
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