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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 following table about the market for a racket with the new material. The company expects to sell the racket for 5 years. The equipment required for the project will be depreciated on a straight-line basis and has no salvage value. The required return for projects of this type is 14 percent and the company has a 24 percent tax rate.

Pessimistic Expected Optimistic
Market size 124,000 134,000 146,000
Market share 18 % 22 % 24 %
Selling price $ 152 $ 157 $ 161
Variable costs per unit $ 99 $ 95 $ 92
Fixed costs per year $ 971,000 $ 916,000 $ 886,000
Initial investment $ 1,635,000 $ 1,485,000 $ 1,465,000

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

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