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onsider a project to supply Detroit with 28,000 tons of machine screws annually for tomobile production. You will need an initial $5,800,000 investment in threading quipment to get the project started; the project will last for 6 years. The accounting epartment estimates that annual fixed costs will be $1,400,000 and that variable costs nould be $265 per ton; accounting will depreciate the initial fixed asset investment raight-line to zero over the 6 -year project life. It also estimates a salvage value of 775,000 after dismantling costs. The marketing department estimates that the utomakers will let the contract at a selling price of $380 per ton. The engineering epartment estimates you will need an initial net working capital investment of 560,000 . You require a return of 14 percent and face a tax rate of 25 percent on this roject. -1. What is the estimated OCF for this project? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) What is the estimated NPV for this project? (Do not round intermediate calculations 2. and round your answer to 2 decimal places, e.g., 32.16.) b. Suppose you believe that the accounting department's initial cost and salvage value projections are accurate only to within \pm 5 percent; the marketing department's price estimate is accurate only to within \pm 10 percent; and the engineering department's net working capital estimate is accurate only to within \pm 15 percent. What are your worstcase and best-case NPVs for this project? (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.) onsider a project to supply Detroit with 28,000 tons of machine screws annually for tomobile production. You will need an initial $5,800,000 investment in threading quipment to get the project started; the project will last for 6 years. The accounting epartment estimates that annual fixed costs will be $1,400,000 and that variable costs nould be $265 per ton; accounting will depreciate the initial fixed asset investment raight-line to zero over the 6 -year project life. It also estimates a salvage value of 775,000 after dismantling costs. The marketing department estimates that the utomakers will let the contract at a selling price of $380 per ton. The engineering epartment estimates you will need an initial net working capital investment of 560,000 . You require a return of 14 percent and face a tax rate of 25 percent on this roject. -1. What is the estimated OCF for this project? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) What is the estimated NPV for this project? (Do not round intermediate calculations 2. and round your answer to 2 decimal places, e.g., 32.16.) b. Suppose you believe that the accounting department's initial cost and salvage value projections are accurate only to within \pm 5 percent; the marketing department's price estimate is accurate only to within \pm 10 percent; and the engineering department's net working capital estimate is accurate only to within \pm 15 percent. What are your worstcase and best-case NPVs for this project? (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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