Question: We are evaluating a project that costs $784,000, has a life of twelve years, and has no salvage value. Assume that depreciation is straight-ine to
We are evaluating a project that costs $784,000, has a life of twelve years, and has no salvage value. Assume that depreciation is straight-ine to zero over the life of the project. Sales are projected at 109,000 units per year. Price per unit is $37, variable cost per unit is $22, and fixed costs are $786.352 per year. The tax rate is 22 percent, and we require a return of 18 percent on this project. The projections given for price, quantity. variable costs, and fixed costs are all accurate to within +/15 percent. a. Calculate the best-case NPV. b. Calculate the worst-case NPV
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