Question
We are evaluating a project that costs $979,000, has a life of thirteen years, and has no salvage value. Assume that depreciation is straight-line to
We are evaluating a project that costs $979,000, has a life of thirteen years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 121,000 units per year. Price per unit is $39, variable cost per unit is $25, and fixed costs are $996,622 per year. The tax rate is 22 percent, and we require a return of 17 percent on this project. The projections given for price, quantity variable costs, and fixed costs are all accurate to within +/- 21 percent. Calculate the best case and worse case NPV.
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