Question: We are evaluating a project that costs $2,100,000, has a 7-year life, and has no salvage value. Assume that depreciation is straight-line to zero over
| We are evaluating a project that costs $2,100,000, has a 7-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 98,600 units per year. Price per unit is $37.79, variable cost per unit is $23.90, and fixed costs are $857,000 per year. The tax rate is 24 percent and we require a return of 12 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. |
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