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A project under consideration costs $750,000, has a five-year life and has no         salvage value. Depreciation is Straight-Line to zero.       The Required Return is 17 percent, and the Tax Rate is 34       percent. Sales are projected at 500 units per year. Price per       unit is $2,500, Variable Cost per unit is $1,500, and Fixed Costs       are $200,000 per year. It is estimated the unit sales, sales price, variable cost, and fixed cost projections given here are accurate to within 5 percent. What are the Base, Upper and Lower bounds for: Sales Variable costs

A project under consideration costs $750,000, has a five-year life and has no         salvage value. Depreciation is Straight-Line to zero.       The Required Return is 17 percent, and the Tax Rate is 34       percent. Sales are projected at 500 units per year. Price per       unit is $2,500, Variable Cost per unit is $1,500, and Fixed Costs       are $200,000 per year. It is estimated the unit sales, sales price, variable cost, and fixed cost projections given here are accurate to within 5 percent. What are the Base, Upper and Lower bounds for: Sales Variable costs

Financial Management: Theory & Practice
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter11: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 8P: The Rodriguez Company is considering an average-risk investment in a mineral water spring project...
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  A project under consideration costs $750,000, has a five-year life and has no  

      salvage value. Depreciation is Straight-Line to zero.

      The Required Return is 17 percent, and the Tax Rate is 34

      percent. Sales are projected at 500 units per year. Price per

      unit is $2,500, Variable Cost per unit is $1,500, and Fixed Costs

      are $200,000 per year.

It is estimated the unit sales, sales price, variable cost, and fixed cost projections given here are accurate to within 5 percent.

What are the Base, Upper and Lower bounds for:

  1. Sales
  2. Variable costs
  3. EBITDA?
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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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