Question
You are considering a new product launch. The project will cost $1,850,000, have a four-year life, and have no salvage value; depreciation is straight-line to
You are considering a new product launch. The project will cost $1,850,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 180 units per year; price per unit will be $22,000, variable cost per unit will be $14,000, and fixed costs will be $520,000 per year. The required return on the project is 12 percent, and the relevant tax rate is 36 percent. |
a. | Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to within |
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