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You are considering a new product launch. The project will cost $820,000, have a 4-year life, and have no salvage value; depreciation is straight-line to
You are considering a new product launch. The project will cost $820,000, have a 4-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 210 units per year, price per unit will be $16,400, variable cost per unit will be $11,300, and fixed costs will be $555,000 per year. The required return on the project is 12 percent, and the relevant tax rate is 24 percent. Based on your experience, you think the unit sales, variable cost and fixed cost projections given here are probably accurate to within 3:10 percent What are the best-case and worst-case values for each of the projections? (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Scenario Fixed Costs Unit Sales Variable Costs 2105 11,300 Base $ 555,000 Best Worst What are the best-case and worst-case OCFS and NPVS with these projections? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to the nearest whole number, e.g. 32.) OCF NPV Best-case Worst-case
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