Problem $10-9$ Scenario analysis

You are considering a proposal to produce and market a new sluffing machine. The most likely outcomes for the project are as follows:

Expected sales: $95,000$ units per year

Unit price: $$180$

Variable cost: $$108$

Fixed cost: $$3,810,000$

The project will last for $10$ years and requires an initial investment of $$9\mathrm{.}74$ million, which will be depreciated straight$-$line over the project life to a final value of zero. The firm's tax rate is $30\%,$ and the required rate of return is $12\%.$

However, you recognize that some of these estimates are subject to error. In one scenario a sharp rise in the dollar could cause sales to fall $30\%$ below expectations for the life of the project and, if that happens, the unit price would probably be only $$170.$ The good news is that fixed costs could be as low as $$2,540,000,$ and variable costs would decline in proportion to sales.

a$.$ What is project NPV if all variables are as expected?

Note: Do not round intermediate calculations. Enter your answer in thousands not in millions and round your answer to the nearest whole dollar amount.

b$.$ What is NPV in the bad$-$case scenario?

Note: Do not round intermediate calculations. Enter your answer in thousands not in millions and round your answer to the nearest whole dollar amount. Negative amount should be indicated with a minus sign.