You are the financial analyst for a tennis racket manufacturer. The company is considering using a graphite like material in its tennis rackets. The company has estimated the information in the following table 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. The required return for projects of this type is 12 percent, and the company has a 34 percent tax rate.

PessimisticExpectedOptimistic

Market size109,000124,000149,000

Market share21%24%26%

Selling price$154$159$165

Variable costs per unit$108$103$102

Fixed costs per year$969,000$924,000$894,000

Initial investment$1,284,000$1,216,000$1,148,000

Calculate the NPV for each case for this project.

Pessimistic

Expected

Optimistic