Question: Intro Consider a project with a 6-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 6-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%. 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) 6,000 4,000 8,000 Part 1 18 Attempt 1/5 for 10 pts. What is the NPV in the base case? No decimals Submit Part 2 18 - Attempt 1/5 for 10 pts. What is the NPV in the pessimistic case? No decimals Submit 18 - Attempt 1/5 for 10 pts. Part 3 What is the NPV in the optimistic case? No decimals
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
