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 2 years ago

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

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