Question
We are evaluating a project that costs$714,400, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the
We are evaluating a project that costs$714,400, 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 90,000 units per year. Price per unit is $51, variable cost per unit is $36, and fixed costs are $745,000 per year. The tax rate is 25 percent, and we require a return of 11 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within 10 percent.
Calculate the best-case and worst-case NPV figures.(A negative answershould be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
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