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We are evaluating a project that costs $954,000, has an twelve-year life, and has no salvage value. Assume that depreciation is straight-line to zero over
We are evaluating a project that costs $954,000, has an twelve-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 151,000 units per year. Price per unit is $36, variable cost per unit is $22, and fixed costs are $967,356 per year. The tax rate is 31 percent, and we require a 21 percent return on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 12 percent. |
Required: | |
(a) | Calculate the best-case NPV. (Do not round your intermediate calculations.) |
(Click to select) $6,747,804 $6,417,569 $7,458,100 $7,102,952 $3,781,454 |
(b) | Calculate the worst-case NPV. (Do not round your intermediate calculations.) |
(Click to select) $1,260,366 $-810,867 $3,781,454 $-1,285,365 $7,458,100 |
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