Consider a project with a 5-year life. The initial cost to setup the project is $100,000. This amount is to be linearlydepreciated to zero over the life of the project and there is nosalvage value. The required return is 13% and the tax rate is 34%.You've collected the following estimates: Base case PessimisticOptimistic Unit sales per year (Q) 8,000 6,000 10,000 Price perunit (P) 50 40 60 Variable cost per unit (VC) 20 35 15 Fixed costsper year (FC) 30,000 50,000 20,000

Attempt 3/5 for 10 pts. Part 1 What is the annual free cash flowin the base case?

Attempt 1/5 for 10 pts. Part 2 What is the NPV in the basecase?

Attempt 1/5 for 10 pts. Part 3 What is the NPV in thepessimistic case?

Attempt 2/5 for 10 pts. Part 4 What is the NPV in the optimisticcase?

Consider a projectwith a 6-year life. The initial cost to set up the project is$100,000. This amount is to be linearly depreciated to zero overthe life of the project and there is no salvage value. The requiredreturn is 11% and the tax rate is 34%.

The price per unit is$50, variable costs are $20 per unit and fixed costs are $30,000per year. You've collected the following estimates for unitsales:

	Base case	Pessimistic	Optimistic
Unit sales per year (Q)	7,000	5,000	9,000

Attempt 2/5 for 8 pts.

Part 1

What is the NPV in thebase case?

Attempt 1/5 for 10 pts.

Part 2

What is the NPV in thepessimistic case?

Attempt 1/5 for 10 pts.

Part 3

What is the NPV in theoptimistic case?