Question: Bob is evaluating a project that requires an initial investment of $724,000 in fixed assets. The project will last for 11 years, and the assets
Bob is evaluating a project that requires an initial investment of $724,000 in fixed assets. The project will last for 11 years, and the assets have no salvage value. Assume the depreciation is straight-line to zero over the life of the project Sales are projected at 82,000 units per year. Price per unit is $43, variable cost per unit is $26, and fixed costs $729,068 per year. The tax rate is 37 percent, and the required annual return on this project is 18 percent. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/21 percent. a) calculate the best case NPV b) calculate the worst case NPV
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