Question: We are evaluating a project that costs $845,000, has an eight-year life, and has no salvage value. Assume that depreciation is straight-line to zero over
We are evaluating a project that costs $845,000, has an eight-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 51,000 units per year. Price per unit is $53, variable cost per unit is $27, and fixed cost are $950,000 per year. The tax rate is 22 percent, and we require a return of 10 percent on this project.
2. In the previous problem, 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-caseNPVfigure
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