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We are evaluating a project that costs $832,000, has a life of 8 years, and has...

We are evaluating a project that costs $832,000, has a life of 8 years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 40,000 units per year. Price per unit is $40, variable cost per unit is $17, and fixed costs are $700,000 per year. The tax rate is 23 percent and we require a return of 13 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.)

Solutions

Expert Solution

Calculation of Best Case NPV :

Best case NPV is shown in the sheet below :

Worst case NPV is shown Below :

jeff jeffy answered 1 year ago
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