Question: P11-6 Scenario Analysis (LO2] We are evaluating a project that costs $888,000, has a life of fourteen years, and has no salvage value. Assume that
P11-6 Scenario Analysis (LO2] We are evaluating a project that costs $888,000, has a life of fourteen years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 156,000 units per year. Price per unit is $40. variable cost per unit is $27, and fixed costs are $903,984 per year. The tax rate is 23 percent, and we require a return of 17 percent on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 12 percent. a. Calculate the best-case NPV. b. Calculate the worst-case NPV. 4
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