Your firm is considering a new product. The consensus of the marketing department is that your firm

can sell $3500$ units of the product a year for $$100$ each. The engineering and production department

believe that the product can be produced for a variable cost of $$50/$unit and that the production of the

product will add $$50,000$ per year in fixed costs to the operation. The equipment to produce the

equipment will cost $$200,000$ to acquire and will be worthless at the end of its five year life. The firm

has a $40\%$ marginal tax rate.

Management has prepared the following base case Pro Forma projection. It believes that its estimates

are accurate to $+$ or $10\%.$ What is the best case and worst case NPV of these projects using a $10\%$ rate

of return?