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The most likely outcomes for a particular project are estimated as follows: Unit price Variable cost Fixed cost Expected sales $ $ 57 30 $310,000 29,700 units per year However, you recognize that some of these estimates are subject to error. Supp each variable may turn out to be either 9% higher or 9% lower than the initial es

The most likely outcomes for a particular project are estimated as follows: Unit price Variable cost Fixed cost Expected sales $ $ 57 30 $310,000 29,700 units per year However, you recognize that some of these estimates are subject to error. Supp each variable may turn out to be either 9% higher or 9% lower than the initial es

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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The most likely outcomes for a particular project are estimated as follows: Unit price Variable cost Fixed cost Expected sales 1 $ $ 57 30 $310,000 29,700 units per year However, you recognize that some of these estimates are subject to error. Suppose that each variable may turn out to be either 9% higher or 9% lower than the initial estimate. The project will last for 12 years and requires an initial investment of $1.2 million, which will be depreciated straight-line over the project life to a final value of zero. The firm's tax rate is 35% and the required rate of return is 10%. What is project NPV in the "best case" scenario. that is, assuming all variables take on the best possible value? (Round your answer to the nearest whole dollar amount.) NPV in the "best case" scenario $ What about the "worst case" scenario? (Use the minus sign for negative values. Round your answer to the nearest whole dollar amount.) NPV in the "unnet 1761536
Transcribed Image Text:The most likely outcomes for a particular project are estimated as follows: Unit price Variable cost Fixed cost Expected sales 1 $ $ 57 30 $310,000 29,700 units per year However, you recognize that some of these estimates are subject to error. Suppose that each variable may turn out to be either 9% higher or 9% lower than the initial estimate. The project will last for 12 years and requires an initial investment of $1.2 million, which will be depreciated straight-line over the project life to a final value of zero. The firm's tax rate is 35% and the required rate of return is 10%. What is project NPV in the "best case" scenario. that is, assuming all variables take on the best possible value? (Round your answer to the nearest whole dollar amount.) NPV in the "best case" scenario $ What about the "worst case" scenario? (Use the minus sign for negative values. Round your answer to the nearest whole dollar amount.) NPV in the "unnet 1761536
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