Question
In: Finance
We are evaluating a project that costs $1,080,000, has a life of 10 years, and has...
We are evaluating a project that costs $1,080,000, has a life of 10 years, 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 $730,000 per year. The tax rate is 25 percent and we require a return of 15 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
jeff jeffy answered 1 year agoRelated Solutions
We are evaluating a project that costs $1,080,000, has a life of 10 years, and has...
We are evaluating a project that costs $1,080,000, has a life of
10 years, 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 $730,000 per year. The
tax rate is 25 percent and we require a return of 15 percent on
this project. Suppose the projections given for...
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 $48, variable
cost per unit is $27, and fixed costs are $756,000 per year. The
tax rate is 25 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 $1,080,000, 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 $1,100,000, has a life of 10 years, and has...
We are evaluating a project that costs $1,100,000, has a life of
10 years, and has no salvage value. Assume that depreciation is
straight-line to zero over the life of the project. Sales are
projected at 47,000 units per year. Price per unit is $50, variable
cost per unit is $25, and fixed costs are $820,000 per year. The
tax rate is 21 percent and we require a return of 16 percent on
this project. Suppose the projections given for...
We are evaluating a project that costs $1,140,000, has a life of 10 years, and has...
We are evaluating a project that costs $1,140,000, has a life of
10 years, and has no salvage value. Assume that depreciation is
straight-line to zero over the life of the project. Sales are
projected at 36,000 units per year. Price per unit is $50, variable
cost per unit is $20, and fixed costs are $720,000 per year. The
tax rate is 23 percent and we require a return of 12 percent on
this project. Suppose the projections given for...
We are evaluating a project that costs $1,100,000, has a life of 10 years, and has...
We are evaluating a project that costs $1,100,000, has a life of
10 years, and has no salvage value. Assume that depreciation is
straight-line to zero over the life of the project. Sales are
projected at 47,000 units per year. Price per unit is $50, variable
cost per unit is $25, and fixed costs are $820,000 per year. The
tax rate is 21 percent and we require a return of 16 percent on
this project. Suppose the projections given for...
We are evaluating a project that costs $1,140,000, has a life of 10 years, and has...
We are evaluating a project that costs $1,140,000, has a life of
10 years, and has no salvage value. Assume that depreciation is
straight-line to zero over the life of the project. Sales are
projected at 36,000 units per year. Price per unit is $50, variable
cost per unit is $20, and fixed costs are $720,000 per year. The
tax rate is 23 percent and we require a return of 12 percent on
this project.
a.
Calculate the accounting break-even...
We are evaluating a project that costs $1,180,000, has a life of 10 years, and has...
We are evaluating a project that costs $1,180,000, has a life of
10 years, and has no salvage value. Assume that depreciation is
straight-line to zero over the life of the project. Sales are
projected at 59,000 units per year. Price per unit is $45, variable
cost per unit is $25, and fixed costs are $750,000 per year. The
tax rate is 25 percent and we require a return of 14 percent on
this project. Suppose the projections given for...
We are evaluating a project that costs $1,160,000, has a life of 10 years, and has...
We are evaluating a project that costs $1,160,000, has a life of
10 years, 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 24 percent and we require a return of 13 percent on
this project. Suppose the projections given for...
We are evaluating a project that costs $972,000, has a life of twelve years, and has...
We are evaluating a project that costs $972,000, has a life of
twelve years, and has no salvage value. Assume that depreciation is
straight-line to zero over the life of the project. Sales are
projected at 117,000 units per year. Price per unit is $35,
variable cost per unit is $25, and fixed costs are $989,496 per
year. The tax rate is 22 percent, and we require a return of 21
percent on this project. The projections given for price,...
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