Question: P11-6 Scenario Analysis [LO2] We are evaluating a project that costs $897,000, has a life of twelve years, and has no salvage value. Assume that
P11-6 Scenario Analysis [LO2] We are evaluating a project that costs $897,000, has a life of twelve years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project Sales are projected at 113,000 units per year. Price per unit is $37, varlable cost per unit is $27, and fixed costs are $906,867 per year. The tax rate is 22 percent, and we require a return of 20 percent on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/-19 percent. a. Calculate the best-case NPV. Best case b. Calculate the worst-case NPV. Worst case
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