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You are considering a new product launch. The project will cost $2,050,000, have a fouryear life, and have no salvage value; depreciation is straight-line to
You are considering a new product launch. The project will cost $2,050,000, have a fouryear life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 170 units per year; price per unit will be $26,000, variable cost per unit will be $16,000, and fixed costs will be $560,000 per year. The required return on the project is 15 percent, and the relevant tax rate is 23 percent. a-1. The unit sales, variable cost, and fixed cost projections given above are probably accurate to within 10 percent. What are the upper and lower bounds for these projections? What is the base-case NPV? What are the best-case and worst-case scenarios? (Do not round intermediate calculations and round your answers to
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