We are evaluating a project that costs $743,000, has a life of eight years, and has...

We are evaluating a project that costs $743,000, has a life of eight years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 124,000 units per year. Price per unit is $37, variable cost per unit is $20, and fixed costs are $749,687 per year. The tax rate is 22 percent, and we require a return of 21 percent on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 15 percent.

a. Calculate the best-case NPV.

b. Calculate the worst-case NPV.

Expert Solution

jeff jeffy answered 1 year ago

We are evaluating a project that costs $982,000, has a life of eight years, and has...

We are evaluating a project that costs $982,000, has a life of eight years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 113,000 units per year. Price per unit is $37, variable cost per unit is $21, and fixed costs are $1,000,658 per year. The tax rate is 24 percent, and we require a return of 13 percent on this project. The projections given for price,...

We are evaluating a project that costs $648,000, has an eight-year life, and will be worth...

We are evaluating a project that costs $648,000, has an eight-year life, and will be worth nothing at the end. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 65,000 units per year. Price per unit is $53, variable cost per unit is $37, and fixed costs are $655,000 per year. The tax rate is 35 percent, and we require a return of 10 percent on this project. a. Calculate the accounting...

We are evaluating a project that costs $500,000, has an eight-year life, and has no salvage...

We are evaluating a project that costs $500,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 50,000 units per year. Price per unit is $40, variable cost per unit is $25, and fixed costs are $600,000 per year. The tax rate is 22 percent, and we require a return of 12 percent on this project. Suppose the projections given for price, quantity,...

We are evaluating a project that costs $841,992, has an eight-year life, and has no salvage...

We are evaluating a project that costs $841,992, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 60,261 units per year. Price per unit is $44, variable cost per unit is $19, and fixed costs are $420,392 per year. The tax rate is 35%, and we require a return of 20% on this project. Calculate the Accounting Break-Even Point. (Round answer to 0...

We are evaluating a project that costs $936,000, has an eight-year life, and has no salvage...

We are evaluating a project that costs $936,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 100,000 units per year. Price per unit is $41, variable cost per unit is $26, and fixed costs are $850,000 per year. The tax rate is 35 percent, and we require a 15 percent return on this project. a) Calculate the accounting break-even point. What is...

We are evaluating a project that costs $500,000, has an eight-year life, and has no salvage...

We are evaluating a project that costs $500,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 50,000 units per year. Price per unit is $40, variable cost per unit is $25, and fixed costs are $600,000 per year. The tax rate is 22 percent, and we require a return of 12 percent on this project. Suppose the projections given for price, quantity,...

We are evaluating a project that costs $892,000, has an eight-year life, and has no salvage...

We are evaluating a project that costs $892,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 85,000 units per year. Price per unit is $63, variable cost per unit is $45, and fixed costs are $779,000 per year. The tax rate is 35%, and we require a 10% return on this project. Suppose the projections given for price, quantity, variable costs, and...

We are evaluating a project that costs $800,000, has an eight-year life, and has no salvage...

We are evaluating a project that costs $800,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 60,000 units per year. Price per unit is $40, variable cost per unit is $20, and fixed costs are $800,000 per year. The tax rate is 35 percent, and we require a return of 10 percent on this project. a-1 Calculate the accounting break-even point. (Do...

We are evaluating a project that costs $892,000, has an eight-year life, and has no salvage...

We are evaluating a project that costs $892,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 85,000 units per year. Price per unit is $63, variable cost per unit is $45, and fixed costs are $779,000 per year. The tax rate is 35%, and we require a 10% return on this project. Suppose the projections given for price, quantity, variable costs, and...

We are evaluating a project that costs $500,000, has an eight-year life, and has no salvage...

We are evaluating a project that costs $500,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 50,000 units per year. Price per unit is $40, variable cost per unit is $25, and fixed costs are $600,000 per year. The tax rate is 22 percent, and we require a return of 12 percent on this project. Suppose the projections given for price, quantity,...

Question

We are evaluating a project that costs $743,000, has a life of eight years, and has...

Solutions

Expert Solution

Related Solutions

We are evaluating a project that costs $982,000, has a life of eight years, and has...

We are evaluating a project that costs $648,000, has an eight-year life, and will be worth...

We are evaluating a project that costs $500,000, has an eight-year life, and has no salvage...

We are evaluating a project that costs $841,992, has an eight-year life, and has no salvage...

We are evaluating a project that costs $936,000, has an eight-year life, and has no salvage...

We are evaluating a project that costs $500,000, has an eight-year life, and has no salvage...

We are evaluating a project that costs $892,000, has an eight-year life, and has no salvage...

We are evaluating a project that costs $800,000, has an eight-year life, and has no salvage...

We are evaluating a project that costs $892,000, has an eight-year life, and has no salvage...

We are evaluating a project that costs $500,000, has an eight-year life, and has no salvage...