Question: You are considering a new product launch. The project will cost $574,000, have a veyear life, and have no salvage value; depreciation is straightline to

You are considering a new product launch. The project will cost $574,000, have a veyear life, and have no salvage value; depreciation is straightline to zero. Sales are projected at 160units per year, price per unit will be $16,000, variable cost per unit will be $12,500, and xed costs will be $179,000 per year. The required return is 13.5 percent and the relevant tax rate is 35 percent. Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to withini3 percent. What is the worstcase NPV? A. $217,907.09 B. $244,612.89 Cf. $308,517.90 D. $312,134.14 E. $358,020.56

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