We are evaluating a project that costs $1,920,000, has a life of 6 years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 94,500 units per year. Price per unit is $38.43, variable cost per unit is $23.60, and fixed costs are $839,000 per year. The tax rate is 23 percent, and we require a return of 12 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±10 percent. Calculate the best-case and worst-case NPV figures. Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g. 32.16. × Answer is complete but not entirely correct. 1,111,083.00 $ OCF Best-case Worst-case $ -189.17 NPV 2,913,723.50 -2,216,283.27
We are evaluating a project that costs $1,920,000, has a life of 6 years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 94,500 units per year. Price per unit is $38.43, variable cost per unit is $23.60, and fixed costs are $839,000 per year. The tax rate is 23 percent, and we require a return of 12 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±10 percent. Calculate the best-case and worst-case NPV figures. Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g. 32.16. × Answer is complete but not entirely correct. 1,111,083.00 $ OCF Best-case Worst-case $ -189.17 NPV 2,913,723.50 -2,216,283.27
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
Problem 1PS
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Transcribed Image Text:We are evaluating a project that costs $1,920,000, has a life of 6 years, and has no salvage value. Assume that
depreciation is straight-line to zero over the life of the project. Sales are projected at 94,500 units per year. Price
per unit is $38.43, variable cost per unit is $23.60, and fixed costs are $839,000 per year. The tax rate is 23
percent, and we require a return of 12 percent on this project.
Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±10
percent. Calculate the best-case and worst-case NPV figures.
Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and
round your answers to 2 decimal places, e.g. 32.16.
× Answer is complete but not entirely correct.
1,111,083.00 $
OCF
Best-case
Worst-case
$
-189.17
NPV
2,913,723.50
-2,216,283.27
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