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We are evaluating a project that costs $1,100,000, has a life of 10 years, and has...

We are evaluating a project that costs $1,100,000, has a life of 10 years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 47,000 units per year. Price per unit is $50, variable cost per unit is $25, and fixed costs are $820,000 per year. The tax rate is 21 percent and we require a return of 16 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±10 percent.

Calculate the best-case and worst-case NPV figures.

  

C

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jeff jeffy answered 2 years ago
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