Question: We are evaluating a project that costs 571,800, has a six year life, and has no salvage value. Assume that depreciation is straight-line to zero
We are evaluating a project that costs 571,800, has a six year life, and has no salvage value. Assume that depreciation is straight-line to zero over life of the project. Sales are projected at 80,000 units per year. Price per unit is 40$, variable cost per unit is 25$, fixed costs are 685,000$ per year. Tax rate is 23 percent, and we require a return of 11 percent on this project. Suppose the projections given for price, quanity, variable costs, and fixed costs are all accurate within 10 percent. Calculate the best case and worst case NPV values.
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