The most likely outcomes for a particular project are estimated as follows: Unit price: $ 4 0
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Question:
The most likely outcomes for a particular project are estimated as follows:
Unit price: $
Variable cost: $
Fixed cost: $
Expected sales: units per year
However, you recognize that some of these estimates are subject to error. Suppose each variable turns out to be either higher or lower than the initial estimate. The project will last for years and requires an initial investment of $ million, which will be depreciated straightline over the project life to a final value of zero. The firms tax rate is and the required rate of return is
What is project's NPV in the bestcase scenario, that is assuming all variables take on the best possible value?
What is project's NPV in the worstcase scenario?
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