Question: Problem 7-2 Scenario Analysis We are evaluating a project that costs $864,000, has a six-year life, and has no salvage value. Assume that depreciation is
Problem 7-2 Scenario Analysis We are evaluating a project that costs $864,000, has a six-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 41,000 units per year. Price per unit is $43, variable cost per unit is $20, and fixed costs are $810,000 per year. The tax rate is 35 percent, and we require a return of 18 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within t10 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. NPV 1.235.201.2 Best-case Worst-case References eBook & Resources Dimculty 1 Basic Worksheet Problem 7-2 Scenario Analysis
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