Question
We are evaluating a project that costs $924,000 and has a six-year life with no salvage value. Assume that depreciation is a straight-line to zero
We are evaluating a project that costs $924,000 and has a six-year life with no salvage value. Assume that depreciation is a straight-line to zero over the life of the project. Sales are projected at 130,000 units per year. Price unit is $34, variable cost per unit is $19, and fixed costs are $800,000 per year. The corporate tax rate is 35%, and we require a 15% on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to with +10% and 10%. Find the worst case scenario analysis for NPV.
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