Question
We are evaluating a project that costs $993,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over
We are evaluating a project that costs $993,000, has an eight-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 94,000 units per year. Price per unit is $41, variable cost per unit is $28, and fixed costs are $1,009,881 per year. The tax rate is 37 percent, and we require a 13 percent return on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 20 percent. |
Required: | |
(a) | Calculate the best-case NPV. (Do not round your intermediate calculations.) |
(Click to select) $4,703,003 $5,924,242 $5,628,030 $6,220,454 $883,581 |
(b) | Calculate the worst-case NPV. (Do not round your intermediate calculations.) |
(Click to select) $-3,837,745 $883,581 $-1,291,464 $6,220,454 $-4,618,205 |
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