You are considering a new product launch. The plant and equipment will cost $1,200,000, have a five year life, and be depreciated on a straight line basis to zero salvage value. Sales are projected at 1,400 units per year, price per unit will be $9,500, variable cost per unit will be $6,700, and fixed costs will be $600,000 per year. The project will require an investment in inventory of $150,000 to be returned at the end of the project. The require return on the project is 12% and the tax rate is 35%. Based on your knowledge, you feel that the price and quantity are accurate to within +/- 10% and fixed costs and variable costs are accurate to within +/- 15%. Show a table with the base case, best case and worst case values for the project. Also, calculate the payback period, NPV and IRR for the worst-case scenario.

PLEASE SHOW WORK

$ A A A A Equipment Project life (years) Units per year Price per unit Variable cost per unit Fixed costs NWC Required return Tax rate Uncertainty Price Units per year Variable cost Fixed cost 1,200,000 5 1,400 9,500 6,700 600,000 150,000 12% 35% 10% 10% 15% 15% $ A A A A Equipment Project life (years) Units per year Price per unit Variable cost per unit Fixed costs NWC Required return Tax rate Uncertainty Price Units per year Variable cost Fixed cost 1,200,000 5 1,400 9,500 6,700 600,000 150,000 12% 35% 10% 10% 15% 15%