Question: The most likely outcomes for a particular project are estimated as follows: Unit price: $50 Variable cost: $30 Fixed cost: $300,000 Expected sales: 30,000 units

The most likely outcomes for a particular project are estimated as follows:

Unit price: $50

Variable cost: $30

Fixed cost: $300,000

Expected sales: 30,000 units per year

However, you recognize that some of the estimates are subject to error. Suppose that each.

variable may turn out to be either 10% higher or 10% lower than the initial estimate. The

project will last for 10 years and requires an initial investment of $1 million, which will be

depreciated using the MACRS 10 year class rates over the project life to a final value of

zero. The firm's tax rate is 35% and the required rate of return is 12%. What is project NPV

in the "best-case scenario," that is, assuming all variables take on the best possible value?

What is the NPV in the worst-case scenario?

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