Consider a project with a $5-$year life. The initial cost to set up the project is $$100,000.$ 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 $13\%$ and the tax rate is $34\%.$

The price per unit is $$50,$ variable costs are $$20$ per unit and fixed costs are $$30,000$ per year. You've collected the following estimates for unit sales:

Base case Pessimistic Optimistic

Unit sales per year $($Q$)5,0003,0007,000$

What is the NPV in the base case?

What is the NPV in the pessimistic case?

What is the NPV in the optimistic case?