Question: Problem 9-21 Scenario Analysis (LO 3] We are evaluating a project that costs $1,740,000, has a 6-year life, and has no salvage value. Assume that
![Problem 9-21 Scenario Analysis (LO 3] We are evaluating a project](https://dsd5zvtm8ll6.cloudfront.net/si.experts.images/questions/2024/10/6713fb9c5955f_8436713fb9bb6914.jpg)
Problem 9-21 Scenario Analysis (LO 3] We are evaluating a project that costs $1,740,000, has a 6-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 86,700 units per year. Price per unit is $38.07, variable cost per unit is $23.30, and fixed costs are $821,000 per year. The tax rate is 22 percent and we require a return of 9 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within +10 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.) Best-case NPV Worst-case NPV
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
