The most likely outcomes for a particular project are estimated as follows: Unit price: Variable cost:...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/664996d9db96c_777664996d92e0fa.jpg)
Transcribed Image Text:
The most likely outcomes for a particular project are estimated as follows: Unit price: Variable cost: Fixed cost: Expected sales: $ 50 $ 30 $ 320,000 31,000 units per year However, you recognize that some of these estimates are subject to error. Suppose each variable turns out to be either 10% higher or 10% lower than the initial estimate. The project will last for 10 years and requires an initial investment of $1.5 million, which will be depreciated straight-line over the project life to a final value of zero. The firm's tax rate is 21%, and the required rate of return is 12%. a. What is project's NPV in the best-case scenario, that is, assuming all variables take on the best possible value? b. What is project's NPV in the worst-case scenario? Note: For all the requirements, a negative amount should be indicated by a minus sign. Enter your answers in dollars, not in millions. Do not round intermediate calculations. Round your answers to the nearest dollar amount. Answer is complete but not entirely correct. 2,154,361x a. NPV $ b. NPV $ (898,793) X The most likely outcomes for a particular project are estimated as follows: Unit price: Variable cost: Fixed cost: Expected sales: $ 50 $ 30 $ 320,000 31,000 units per year However, you recognize that some of these estimates are subject to error. Suppose each variable turns out to be either 10% higher or 10% lower than the initial estimate. The project will last for 10 years and requires an initial investment of $1.5 million, which will be depreciated straight-line over the project life to a final value of zero. The firm's tax rate is 21%, and the required rate of return is 12%. a. What is project's NPV in the best-case scenario, that is, assuming all variables take on the best possible value? b. What is project's NPV in the worst-case scenario? Note: For all the requirements, a negative amount should be indicated by a minus sign. Enter your answers in dollars, not in millions. Do not round intermediate calculations. Round your answers to the nearest dollar amount. Answer is complete but not entirely correct. 2,154,361x a. NPV $ b. NPV $ (898,793) X
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
9. What is the coordination entity formed when excess of aqueous KCN is added to an aqueous solution of copper sulphate? Why is it that no precipitate of copper sulphide is obtained when H2S(g) is...
-
How does information from the balance sheet help users of the financial statements?
-
For John Dunham Inc. variable manufacturing overhead costs are expected to be \($20,000\) in the first quarter of 2002, with \($3,000\) increments in each of the remaining three quarters. Fixed...
-
Name which keys are one whole step up and one whole step down from the following: 1. \(D^{b}\) 2. \(C^{\#}\) 3. \(\mathrm{E}\)
-
Pioneer Parts, a manufacturer of windows for commercial buildings, reports the following account information for last year (all costs are in thousands of dollars): Information on January 1...
-
Please help Problem 1 Find any critical points for g(x) = -2. Determine if they are local maximums or minimums. Problem 2 Let f ( x ) = xe*. a. Find any local max/mins. b. Where is f increasing? c....
-
Graph the function and write the domain and range in interval notation f x 3 Part 0 2 Part 1 of 2 Graph the function f x 3 D
-
As we near the end of this course, it is time to begin thinking about what comes next. Please reflect upon and answer the following questions: What do you hope to do with your degree? Which course...
-
JSOM Company makes custom furniture and uses a joborder-cost system.The company always writes off under/over applied overhead to cost of goods sold.The following data pertains to the first quarter of...
-
The JEM Company has been in operation for over 40 years and has 20,000 shares of $100 par-value common stock authorized, of which 12,000 shares have been issued. THe market value of the stock...
-
A restaurant's breakeven point is achieved with sales of $1,250,000. If its average check is $40, and the average variable cost per menu item sold is $15, what is its total monthly fixed costs?
-
On October 18, 2022, Suzanne executed several transactions involving the sale of securities. All but one of the transactions involved the sale of covered securities. Which of these is the noncovered...
-
4.Mike Flannery holds thefollowingportfolio: Stock Investment Beta A$150,0001.40 B50,0000.80 C100,0001.00 D75,0001.20 What is the portfolio's beta? What are the steps to solve this using excel?
-
$10,000 was borrowed at 3.5% on July 17. The borrower repaid $5000 on August 12, and $2000 on September 18. What final payment is required on November 12 to fully repay the loan?
-
Labor schedule with iearning curve costs Botega Company has just completed the first 30 units of a small single-engine airplane of a new design. The average labor cost for the 30 airplanes was...
-
Use of iearning curve tabies The S & J Engineering Company utilized 1,200 hours of labor to design and write production specification for the production line of a new manufacturing plant the firm has...
-
Learning curve schedule and formulas The time required to complete the first unit of a labor-intensive product was 100 hours. Production is subject to a learning curve with an 80 percent learning...
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App