Question
We are evaluating a project that costs $891,000, 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 $891,000, 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 proj cted at 109,000 units per year. Price per unit is $37, variable cost per unit is $23, and fixed costs are $902,583 per year. The tax rate is 24 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 +/- percent. Calculate the best and worst case NPV.
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