PQR Ltd. is considering equipment of $1,680,000, has a life of six-year, and depreciation is straight-line...

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PQR Ltd. is considering equipment of $1,680,000, has a life of six-year, and depreciation is straight-line to zero over the useful life of the project. The salvage value of the equipment is zero at the end of the project. Data of sales, price per unit, variable cost per unit, and fixed cost is provided in the table below. Sales in units are 88,500; the Price per unit is $37.50. Variable cost per unit is $20.35; Fixed cost is $750,000. Sales units, price, variable cost, and fixed cost are all accurate to within 5%. Calculate the net present value (NPV) under three scenarios. Best case; Base case; Worst-case scenario, when the required rate of return is 12% and the tax rate is 30%. Solution I PQR Ltd. is considering equipment of $1,680,000, has a life of six-year, and depreciation is straight-line to zero over the useful life of the project. The salvage value of the equipment is zero at the end of the project. Data of sales, price per unit, variable cost per unit, and fixed cost is provided in the table below. Sales in units are 88,500; the Price per unit is $37.50. Variable cost per unit is $20.35; Fixed cost is $750,000. Sales units, price, variable cost, and fixed cost are all accurate to within 5%. Calculate the net present value (NPV) under three scenarios. Best case; Base case; Worst-case scenario, when the required rate of return is 12% and the tax rate is 30%. Solution I