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 fixed costs are all accurate to within ±10%.

Calculate the best-case and worst-case NPV figures. (Omit $ sign in your response. Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Round the final answers to 2 decimal places.)


Best-case NPV	$
Worst-case NPV	$

Expert Solution

jeff jeffy answered 2 years ago

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

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