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We are evaluating a project that costs $983,000, has an seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over
We are evaluating a project that costs $983,000, has an seven-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 $45, variable cost per unit is $21, and fixed costs are $1,001,677 per year. The tax rate is 30 percent, and we require a 15 percent return on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 16 percent. (please show work)
Required: | |
(a) | Calculate the best-case NPV. (Do not round your intermediate calculations.) |
(Click to select)$7,366,884$4,084,815$6,082,583$7,016,080$6,665,276 |
(b) | Calculate the worst-case NPV. (Do not round your intermediate calculations.) |
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