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You are considering a new product launch. The project will cost $5,200,000, have a five-year life, and have no salvage value; depreciation is straight-line to

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You are considering a new product launch. The project will cost $5,200,000, have a five-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 750 units per year; price per unit will be $15,500, variable cost per unit will be $12,000, and fixed costs will be $750,000 per year. The required return on the project is 12 percent, and the relevant tax rate is 21 percent. Based on your experience, you think the unit sales are accurate only to within 10%, variable costs are accurate only to within 12%, and fixed cost projections given here are probably accurate to within \pm 8 percent. (You don't need to consider the NWC for this question.) (20 Points) Questions: 1. What are NPVs for the base-se, the best-case, and worst-case scenarios? 2. What is the cash break-even, accounting break-even and financial break-even level of output for this project (ignoring taxes)? (The target cell should be the number of unites they produce.)

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