Question: We are evaluating a project that costs $ 9 4 0 , 0 0 0 , will last for seven years, and has no salvage

We are evaluating a project that costs $940,000, will last for seven years, and has no salvage value. The equipment will be depreciated in a straight-line manner over the projects life. Sales will be 69,000 units per year. The price per unit is $70, variable cost per unit is $42, and fixed costs are $965,000 per year. The tax rate is 24 percent, and the required return is 10 percent. Suppose the projections for price, quantity, variable costs, and fixed costs are accurate to 10 percent. What are the best-case and worst-case NPVs for this project?

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