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We are evaluating a project that costs $762,000, has a life of seven years, and has no salvage value. Assume that depreciation is straight-line to
We are evaluating a project that costs $762,000, has a life of seven years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 158,000 units per year. Price per unit is $43, variable cost per unit is $20, and fixed costs are $765,048 per year. The tax rate is 21 percent, and we require a return of 16 percent on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 16 percent.
We are evaluating a project that costs $762,000, has a life of seven years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 158,000 units per year. Price per unit is $43, variable cost per unit is $20, and fixed costs are $765,048 per year. The tax rate is 21 percent, and we require a return of 16 percent on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/16 percent. a. Calculate the best-case NPV. Best case b. Calculate the worst-case NPVStep by Step Solution
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