Question: We are evaluating a project that costs $684,617, has a five-year life, and has no salvage value. Assume that depreciation is straight-line to zero over
We are evaluating a project that costs $684,617, 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 $43,812 units per year. Price per unit is $50, variable cost per unit is $28, and fixed costs are $520,044 per year. The tax rate is 30%, and we require a return of 19% on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/-10 percent.
What is the best case NPV?
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