Gibson Mfg., Inc. is considering the introduction of a new product. Company management has prepared the following estimates related to the project as well as the related range of values, where applicable. The project under consideration has a five-year life and initial costs of $15,000. Assume the tax rate is 34 percent, there is no salvage value, and the project requires a 12 percent rate of return.

Sales Quantity 2,000± 7percent

Sales price $14.00 ± 10percent

Variable cost per unit $10.00± 2percent

Fixed costs $8,000± 1percent

Depreciation $,3000

What is the projected optimistic net present value?

Answer rating: 100% (QA)

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