We are evaluating a project that costs $987,000, has an fourteen-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 138,000 units per year. Price per unit is $38, variable cost per unit is $28, and fixed costs are $1,005,753 per year. The tax rate is 33 percent, and we require a 12 percent return on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 18 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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