We are evaluating a project that costs $728,000, has a life of twelve years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 144,000 units per year. Price per unit is $42, variable cost per unit is $24, and fixed costs are $730,184 per year. The tax rate is 22 percent, and we require a return of 11 percent on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 17 percent. a. Calculate the best-case NPV. Best case b. Calculate the worst-case NPV. Worst case

We are evaluating a project that costs $728,000, has a life of twelve years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 144,000 units per year. Price per unit is $42, variable cost per unit is $24, and fixed costs are $730,184 per year. The tax rate is 22 percent, and we require a return of 11 percent on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 17 percent. a. Calculate the best-case NPV. Best case b. Calculate the worst-case NPV. Worst case

Name: Kk.226. We are evaluating a project that costs $728,000, has a life of
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Description: Kk.226. We are evaluating a project that costs $728,000, has a life of twelve years, and has nosalvage value. Assume that depreciation is straight-line to zero over the life of theproject. Sales are projected at 144,000 units per year. Price per unit

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter11: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 8P

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