Calculate the best and worst case npv

Assignment Help Financial Management

Reference no: EM131904192

We are evaluating a project that costs $831,000, has an nine-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 100,000 units per year. Price per unit is $37, variable cost per unit is $21, and fixed costs are $832,662 per year. The tax rate is 33 percent, and we require a 14 percent return on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 20 percent.

Calculate the Best and worst case NPV.

Reference no: EM131904192

Questions Cloud

Current spot price of asset and corresponding futures price : The difference between the current spot price of an asset and the corresponding futures price is known as the ___ for the futures.

Organized exchange mechanism reassures futures buyer : What organized exchange mechanism reassures the futures buyer and seller that the obligations of the other party will be fulfilled?

Daily settlement price of the futures contract : The process of adjusting the equity in an investor’s account in order to reflect the change in the daily settlement price of the futures contract

An important assumption of put-call parity : An important assumption of put-call parity is that

Calculate the best and worst case npv : We are evaluating a project that costs $831,000, has an nine-year life, and has no salvage value. Calculate the Best and worst case NPV.

Increase the market value of put option and call option : A(n) ____ will increase the market value of a call option. A(n) ____ will increase the market value of a put option.

Considering investing in security services : You are considering investing in Nuran Security Services. Calculate the ROE for the firm.

The stock and bond markets are very efficient : The stock and bond markets are very efficient. bond prices will fall when lenders expect higher rates inflation in the future.

Think about cash flows in two different years : Suppose you face an investment decision in which you must think about cash flows in two different years.

User Account

All Pages