Family Security is considering introducing tiny GPS trackers that can be inserted in the sole of a child's shoe, which would then allow for the

tracking of that child if he or she was ever lost or abducted The

estimates, that might be off by 9 percent (either above or below), associated with this new product are shown here:

#

Since this

a new product line, you are not confident in your estimates and would like to know how well vou will fare if vour estimates on the items listed above are 9 percent hiaher or 9 percent lower than

exoecion

Assume that this new product line will require an initial outlay of $1.05 million, with no workina capital investment, and will last for 10 years, being depreciated down to zero using

straight-line depreciation. In addition, the firm's required rate of return or cost of capital is 9.8 percent, and the firm's marginal tax rate is 34 percent. Calculate the project's NPV under the

scenano

"best-case

(that is, use the high estimates- -unit price 9 percent above expected, variable costs 9 percent less than expected, fixed costs 9 percent less than

expected, and expected sales 9 percent

more than expected). Calculate the project's NPV under the "worst-case scenario

The NPV for the best-case scenario will be S.

Round to the nearest dolar

Unit price:

$127

Variable costs:

$73

Fixed costs:

$246,000 per year

Expected sales:

10,800 per year