Question

In: Finance

We are evaluating a project that costs $1,675,000, has a six-year life, and has no salvage...

We are evaluating a project that costs $1,675,000, has a six-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 91,000 units per year. Price per unit is $35.95, variable cost per unit is $21.40, and fixed costs are $775,000 per year. The tax rate is 35 percent, and we require a return of 11 percent on this project.
Required:

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. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places (e.g., 32.16).)
NPV
  Best-case $     
  Worst-case $     

Solutions

Expert Solution

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

We are evaluating a project that costs $1,374,000, has a six-year life, and has no salvage...
We are evaluating a project that costs $1,374,000, has a six-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 87,400 units per year. Price per unit is $34.45, variable cost per unit is $20.70, and fixed costs are $754,000 per year. The tax rate is 30 percent, and we require a return of 11 percent on this project. Calculate the base-case operating cash flow and...
We are evaluating a project that costs $768,000, has a six-year life, and has no salvage...
We are evaluating a project that costs $768,000, has a six-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 57,000 units per year. Price per unit is $60, variable cost per unit is $35, and fixed costs are $770,000 per year. The tax rate is 35 percent, and we require a return of 15 percent on this project. Suppose the projections given for price, quantity,...
We are evaluating a project that costs $756,000, has a six-year life, and has no salvage...
We are evaluating a project that costs $756,000, has a six-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 67,000 units per year. Price per unit is $60, variable cost per unit is $42, and fixed costs are $665,000 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,...
We are evaluating a project that costs $768,000, has a six-year life, and has no salvage...
We are evaluating a project that costs $768,000, has a six-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 57,000 units per year. Price per unit is $60, variable cost per unit is $40, and fixed costs are $768,000 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 $583,800, has a six-year life, and has no salvage...
We are evaluating a project that costs $583,800, has a six-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 90,000 units per year. Price per unit is $41, variable cost per unit is $27, and fixed costs are $695,000 per year. The tax rate is 25 percent, and we require a return of 9 percent on this project. Suppose the projections given for price, quantity,...
We are evaluating a project that costs $560,400, has a six-year life, and has no salvage...
We are evaluating a project that costs $560,400, has a six-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 80,000 units per year. Price per unit is $38, variable cost per unit is $24, and fixed costs are $680,000 per year. The tax rate is 22 percent, and we require a return of 10 percent on this project. Suppose the projections given for price, quantity,...
We are evaluating a project that costs $560,400, has a six-year life, and has no salvage...
We are evaluating a project that costs $560,400, has a six-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 80,000 units per year. Price per unit is $38, variable cost per unit is $24, and fixed costs are $680,000 per year. The tax rate is 22 percent, and we require a return of 10 percent on this project. Suppose the projections given for price, quantity,...
We are evaluating a project that costs $571,800, has a six-year life, and has no salvage...
We are evaluating a project that costs $571,800, has a six-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 80,000 units per year. Price per unit is $40, variable cost per unit is $25, and fixed costs are $685,000 per year. The tax rate is 23 percent, and we require a return of 11 percent on this project. a-1. Calculate the accounting break-even point. a-2.What...
We are evaluating a project that costs $756,000, has a six-year life, and has no salvage...
We are evaluating a project that costs $756,000, has a six-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 67,000 units per year. Price per unit is $60, variable cost per unit is $25, and fixed costs are $693,000 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. (Do...
We are evaluating a project that costs $756,000, has a six-year life, and has no salvage...
We are evaluating a project that costs $756,000, has a six-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 67,000 units per year. Price per unit is $60, variable cost per unit is $25, and fixed costs are $693,000 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. (Do...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT