Question: Problem 11-6 Scenario Analysis [LO2] We are evaluating a project that costs $691,200, has an eight-year life, and has no salvage value. Assume that depreciation
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Problem 11-6 Scenario Analysis [LO2] We are evaluating a project that costs $691,200, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 85,000 units per year. Price per unit is $50, variable cost per unit is $35, and fixed costs are $740,000 per year. The tax rate is 24 percent, and we require a return of 10 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within +15 percent. Calculate the best-case and worst-case NPV figures. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) NPV Best-case Worst-case
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