Question
We are evaluating a project that costs $781,000, has a life of eleven years, and has no salvage value. Assume that depreciation is straight-line to
We are evaluating a project that costs $781,000, has a life of eleven years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 84,000 units per year. Price per unit is $41, variable cost per unit is $21, and fixed costs are $792,715 per year. The tax rate is 24 percent, and we require a return of 18 percent on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 18 percent. Calculate the best case and worst case NPV. |
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