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You are the financial analyst for a tennis racket manufacturer. The company is considering using a graphitelike material in its tennis rackets. The company has

You are the financial analyst for a tennis racket manufacturer. The company is considering using a graphitelike material in its tennis rackets. The company has estimated the information in the table below about the market for a racket with the new material. The company expects to sell the racket for four years. The equipment required for the project has no salvage value and will be depreciated on a straight-line basis. The required return for projects of this type is 12 percent, and the company has a 34 percent tax rate.

Pessimistic Expected Optimistic
Market size 118,000 133,000 158,000
Market share 21 % 24 % 26 %
Selling price $ 147 $ 152 $ 158
Variable costs per unit $ 101 $ 96 $ 95
Fixed costs per year $ 962,000 $ 917,000 $ 887,000
Initial investment $ 1,260,000 $ 1,192,000 $ 1,124,000

Calculate the NPV for each case for this project. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Pessimistic $
Expected $
Optimistic $

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