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We are evaluating a project that costs $ 7 0 4 , 0 0 0 , has a life of nine years, and has no

We are evaluating a project that costs $704,000, has a life of nine years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 130,000 units per year. Price per unit is $37, variable cost per unit is $21, and fixed costs are $712,448 per year. The tax rate is 25 percent, and we require a return of 13 percent on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/-16 percent.

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