We are evaluating a project that costs $660,000, has a life of 5 years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 58,000 units per year. Price per unit is $57, variable cost per unit is $38, and fixed costs are $660,000 per year. The tax rate is 22 percent and we require a return of 16 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. (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.)
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We are evaluating a project that costs $660,000, has a life of 5 years, and has no salvage value. Assume that |
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Calculate the best-case and worst-case |
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