Question: We are evaluating a project that costs $670,000, has a five-year life, and has no salvage value. Assume that depreciation is straight-line to zero

We are evaluating a project that costs $670,000, has a five-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 59,000 units per year. Price per unit is $44, variable cost per unit is $24, and fixed costs are $760,000 per year. The tax rate is 35 percent, and we require a return of 18 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. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to 2 decimal places (e.g., 32.16).) Best-case Worst-case NPV 5959 $ $
Step by Step Solution
There are 3 Steps involved in it
To calculate the bestcase and worstcase net present value NPV figures we need to consider the projected sales costs and cash flows over the fiveyear l... View full answer
Get step-by-step solutions from verified subject matter experts
