XYZ Inc. is analyzing a capital budgeting project with the following cash flow forecasts:
	Base case (probability = 50%)	Best case (probability = 20%)	Worst case (probability = 30%)
3-year project
Unit sales /per year (not expected to grow over project life)	1,500	1,650	1,350
Unit price	$50	$52	$48
Variable cost/per unit	$20	$18	$22.50
Fixed cost/per year	$5,000	$4,000	$6,000
Initial fixed capital Investment (Includes equipment cost; To be depreciated to salvage value via straight-line method over project life)	$50,000	$50,000	$50,000
Salvage value, Year 3	$10,000	$10,000	$10,000
Net working capital investment at yr 0 (expected to be constant over project life and returned at completion of project)	$15,000	$12,000	$18,000
Marginal tax rate	37.5%	35%	40%
Cost of capital	10%	8%	12%
Also, given the following:
1. The estimated initial fixed capital investment value was based on the assumption that the project would use space in a building that XYZ now owns and that the space could be leased to another company for $3,000 per year, after taxes, if this project is rejected.
2. The 3-yr project would cause increase in cash flows to another division of XYZ Inc. and such net after-tax cash flows have been estimated to be $1,500 per year
3. After-tax cost of completing prior market research for the project was $5,500