Tom is evaluating a project that costs $ 1 , 0 8 0 , 0 0 0
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Question:
Tom is evaluating a project that costs $ has a tenyear life, and has no salvage
value. Assume that depreciation is straightline to zero over the life of the project. Sales
are projected at units per year. Price per unit is $ variable cost per unit is $
and fixed costs are $ per year. The tax rate is percent, and we require a return
of percent on this project. Suppose the projections given for price, quantity, variable
costs, and fixed costs are all accurate to within pm percent. Help Tom calculate the best
case and worstcase NPV figures.
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