We are evaluating a project that costs $1,160,000, has a ten-year life, and has no salvage...

We are evaluating a project that costs $1,160,000, has a ten-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 44,000 units per year. Price per unit is $45, variable cost per unit is $22, and fixed costs are $645,000 per year. The tax rate is 24 percent, and we require a return of 20 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. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Expert Solution

jeff jeffy answered 2 years ago

We are evaluating a project that costs $1,160,000, has a ten-year life, and has no salvage...

We are evaluating a project that costs $1,160,000, has a ten-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 44,000 units per year. Price per unit is $45, variable cost per unit is $20, and fixed costs are $645,000 per year. The tax rate is 35 percent, and we require a return of 20 percent on this project. Suppose the projections given for price, quantity,...

We are evaluating a project that costs $1,160,000, has a ten-year life, and has no salvage...

We are evaluating a project that costs $1,160,000, has a ten-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 44,000 units per year. Price per unit is $45, variable cost per unit is $20, and fixed costs are $645,000 per year. The tax rate is 35 percent, and we require a return of 20 percent on this project. Suppose the projections given for price, quantity,...

1) We are evaluating a project that costs $1,160,000, has a ten-year life, and has no...

1) We are evaluating a project that costs $1,160,000, has a ten-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 44,000 units per year. Price per unit is $45, variable cost per unit is $20, and fixed costs are $696,000 per year. The tax rate is 35 percent, and we require a return of 20 percent on this project. a. Calculate the accounting break-even point....

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We are evaluating a project that costs $1,080,000, has a ten-year life, and has no salvage...

We are evaluating a project that costs $1,080,000, has a ten-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 52,000 units per year. Price per unit is $50, variable cost per unit is $30, and fixed costs are $756,000 per year. The tax rate is 35 percent, and we require a return of 15 percent on this project. a. Calculate the accounting break-even point. (Do...

We are evaluating a project that costs $1,160,000, has a life of 10 years, and has...

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We are evaluating a project that costs $972,000, has a 4 year life, and no salvage value. Assume that depreciation is staright-line to zero over the life of the project. Sales are projected at 88,000 units per year. Price per unit is $35.15, variable cost per unit is $21.40 and fixed costs are $768,000 per year. The tax rate is 35 percent and we require a return of 13 percent on this project. A) Calculate the best case operating cash...

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We are evaluating a project that costs $1,160,000, has a ten-year life, and has no salvage...

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