Question: Intro Consider a project with a 3-year life. The initial cost to set up the project is $100,000. This amount is to be linearly depreciated


Intro Consider a project with a 3-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 11% and the tax rate is 34%. You've collected the following estimates: Base case Pessimistic Optimistic Unit sales per year (Q) 8,000 6,000 10,000 Price per unit (P) 40 60 Variable cost per unit (VC) 20 15 Fixed costs per year (FC) 30,000 50,000 20,000 50 35 B Attemp Part 1 What is the annual cash flow from assets in the base case? 0+ decimals Submit B Attemp Part 2 What is the NPV in the base case? 0+ decimals Submit IBAttemp Part 3 What is the NPV in the pessimistic case? 0+ decimals Submit 18 Attempt 1/10 Part 4 What is the NPV in the optimistic case? 0+ decimals Submit
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
