Question: We are evaluating a project that costs $750,000, has an twelve-year life, and has no salvage value. Assume that depreciation is straight-line to zero over
| We are evaluating a project that costs $750,000, has an twelve-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 109,000 units per year. Price per unit is $42, variable cost per unit is $21, and fixed costs are $750,750 per year. The tax rate is 35 percent, and we require a 19 percent return on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 13 percent. |
| Required: | |
| (a) | Calculate the best-case NPV. (Do not round your intermediate calculations.) |
| (b) | Calculate the worst-case NPV. (Do not round your intermediate calculations.) |
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