Question
We are evaluating a project that costs $898,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over
We are evaluating a project that costs $898,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 88,000 units per year. Price per unit is $66, variable cost per unit is $48, and fixed costs are $782,000 per year. The tax rate is 35%, and we require a 10% return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within 10%.
Calculate the best-case and worst-case NPV figures. (Omit $ sign in your response. Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round the final answers to 2 decimal places.)
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