We are evaluating a project that costs $101,968, has a seven-year life, and has no salvage...

 

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We are evaluating a project that costs $101,968, has a seven-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 4,111 units per year. Price per unit is $49, variable cost per unit is $27, and fixed costs are $83,619 per year. The tax rate is 31 percent, and we require a 10 percent return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/-11 percent. What is the NPV of the project in best-case scenario? (Negative amount should be indicated by a minus sign. Round your final answer to the nearest dollar amount. Omit the "$" sign and commas in your response. For example, $123,456.78 should be entered as 123457.) We are evaluating a project that costs $101,968, has a seven-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 4,111 units per year. Price per unit is $49, variable cost per unit is $27, and fixed costs are $83,619 per year. The tax rate is 31 percent, and we require a 10 percent return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/-11 percent. What is the NPV of the project in best-case scenario? (Negative amount should be indicated by a minus sign. Round your final answer to the nearest dollar amount. Omit the "$" sign and commas in your response. For example, $123,456.78 should be entered as 123457.)

Answer rating: 100% (QA)

Heres how to calculate the NPV of the project in the bestcase scenario 1 Calculate annual cash flows ... View the full answer