Anna is reviewing a new 5-year project with expected sales of 3,400 units, give or take 8%. The expected variable cost per unit is $22 and the expected fixed costs are $47,500. Cost estimates are considered accurate within a plus or minus 2% range. The depreciation expense is $17,800. The sale price is estimated at $45/unit, give or take 3%. The project initially requires $165,000 of fixed assets and $42,000 of net working capital. At The end of the project, the networking capital will be recouped and the fixed assets will produce an after tax cash inflow of $35,000. The tax rate is 35% and the discount rate is 14%. What is the net present value of the best-case scenario?

Answer rating: 100% (QA)

To calculate the net present value NPV of the bestcase scenario for the project we need to estimate the cash flows associated with the project and discount them to their present value using the discou... View the full answer