We are evaluating a project that costs $714,400, has an eight-year life, and has no salvage...

70.2K

Verified Solution

Question

Finance

We are evaluating a project that costs $714,400, has aneight-year life, and has no salvage value. Assume that depreciationis straight-line to zero over the life of the project. Sales areprojected at 90,000 units per year. Price per unit is $51, variablecost per unit is $36, and fixed costs are $745,000 per year. Thetax rate is 25 percent, and we require a return of 11 percent onthis project. Suppose the projections given for price, quantity,variable costs, and fixed costs are all accurate to within Â±10percent.
Â Â
Calculate the best-case and worst-case NPV figures. (Anegative answer should be indicated by a minus sign. Do not roundintermediate calculations and round your answers to 2 decimalplaces, e.g., 32.16.)

Answer & Explanation Solved by verified expert

3.8 Ratings (500 Votes)

best case In the best case price will be higher quantity will be highervariable cost lower and fixed cost lowerquantity 90000 1 10 99000price 51 1 10 See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member