Question
We are evaluating a project that costs $988000, has a 9-year life, and has no salvage value. Assume that depreciation is straight-line to zero over
We are evaluating a project that costs $988000, has a 9-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 100047 units per year. Price per unit is $55, variable cost per unit is $27, and fixed costs are $920000 per year. The tax rate is 37 %, and we require a 12 % return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/-14 percent.
What is the best-case NPV?
What is the worst-case NPV?
What is the accounting break-even quantity?
What is the financial break-even quantity is?
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