Question
We are evaluating a project that costs $778,000, has a life of ten years, and has no salvage value. Assume that depreciation is straight-line to
We are evaluating a project that costs $778,000, has a life of ten years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 83,000 units per year. Price per unit is $37, variable cost per unit is $29, and fixed costs are $794,338 per year. The tax rate is 21 percent, and we require a return of 14 percent on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 15 percent. |
a. Calculate the best-case NPV. |
b. Calculate the worst-case NPV. |
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Calculate the worst-case NPV.
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