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19. You are considering a new product launch. The project will require an equipment that cost $1,400,000, have a four year life, and have $200,000 salvage value; CCA rate for the equipment is 30%. The initial working capital is $100,000. Sales are projected at 180 units per year, price per unit will be $16,000, variable cost per unit will be 59,800, and feed costs will be 5430,000 per year. The required return on the project is 12 percent, and the relevant tax rate is 15 percent Based on your experience, you think the unit sales, variable cost, and fixed cost, working capital and salvage value projections given here are probably accurate to within 10 percent. What are the upper and lower bounds for these projections? Show inputs that you will use for the worst case scenarios b. What is the base-case NPV? What is the NPV for the worst case scenario? d. Discuss the implication of the scenario analysis conducted for this project. Input area: Question : Inputs for Marks Base Case Inputs Worst case inputs $1,400,000 Project Cost Project life CCA Rate Sales Units Selling Price Unit Variable Cost Fixed Cost Required Return Tax rate Salvage Value Initial working Capital 30% 180 $ 16,000 $9,800 $430,000 12% 35% $ 200,000 $ 100,000 Output area: Output area Question : Base Case Scenario 0 Year Sales Variable Cost Gross Marin Foxed costs LBT Taxes Operating cash flow (OCF) Initial Investment Working Capital CCA Tax shield(use formula) Salvage Value Working Capital return Total Annual Project Cash Flow NPV Calculation IRR Calculation Question c: Worst Case Scenario Analysis 0 Year Sales Variable Cost Gross Margin Fixed costs EBT Taxes OCF Initial Investment Working Capital CCA Tax shield(use formula) Salvage Value Working Capital return Total Annual Project Cash Flow NPV Calculation IRR Calculation Question d: Discuss the implication of the worst case scenario analysis conducted on the project's viability

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