Consider a project with a 3 - year life. The initial cost to set up the project
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Question:
Consider a project with a year life. The initial cost to set up the project is $ This amount is to be linearly depreciated to zero over the life of the project and there is no salvage value. The required return is and the tax rate is
You've collected the following estimates:
Base case Pessimistic Optimistic
Unit sales per year Q
Price per unit P
Variable cost per unit VC
Fixed costs per year FC
What is the annual cash flow from assets in the base case?
What is the NPV in the base case?
What is the NPV in the pessimistic case?
What is the NPV in the optimistic case?
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