Calculate the best-case npv and worst-case npv

Assignment Help Financial Management
Reference no: EM131904122

We are evaluating a project that costs $943,000, has an eight-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 156,000 units per year. Price per unit is $37, variable cost per unit is $28, and fixed costs are $960,917 per year. The tax rate is 37 percent, and we require a 13 percent return on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 17 percent.

Calculate the best-case NPV.

Calculate the worst-case NPV.

Reference no: EM131904122

Questions Cloud

Provide a business which produces a substantial income : Your promotional plan needs to be designed so you can provide a business which produces a substantial income.
Explain the levels of the independent variable : Explain the levels of the independent variable. Describe the threats to validity (external or internal) in article. Did authors address these threats?
Plant assets in preparing consolidations workpapers : Explain in details the impact of intercompany profit on transfers of plant assets in preparing consolidations workpapers.
Find at least one company in one of categories to present : Discuss and explain each of the following organization structures. Find at least one company in one of the categories to present to the class.
Calculate the best-case npv and worst-case npv : We are evaluating a project that costs $943,000, has an eight-year life, and has no salvage value. Calculate the best-case NPV. Calculate the worst-case NPV.
Calculate the penalty : The IRS sent her a penalty charge of 7.40% simple interest on the unpaid taxes of $2,400. Calculate the penalty.
How would you have addressed the situation : What would have happened if the hospital had not been assisted by other agencies? Why? How would you have addressed the situation?
Profit or loss associated with writing covered call : determine the profit or loss associated with writing a covered call for Nile.com.
Find percentage of each grape blended into the batch of wine : /Meritage wines from California are an American creation. The flavor and aroma are determined in large part by the percentage of each grape blended.

Reviews

Write a Review

Financial Management Questions & Answers

  Which is low by historical standards

Bay City Mining, Inc. has a price of $20 a share, outstanding shares of 2.5 million, retained earnings of $1 million dollars, and a dividend yield of 2 percent. It has a price-earnings ratio of a. 50, which is low by historical standards. b. 25, whic..

  Compute the price of bonds based on semiannual analysis

Heather Smith is considering a bond investment in Locklear Airlines. The $1,000 par value bonds have a quoted annual interest rate of 11 percent and the interest is paid semiannually. The yield to maturity on the bonds is 14 percent annual interest. ..

  Decided to sell some new bonds

In 2007 Carnival Cruise Lines decided to sell some new bonds (something about fixing a big ship). They sold the bonds for $1,000 (face value) with a 20 year maturity and an 7% coupon. what should they expect to receive for it in the secondary market?

  What is the real rate of return on these bonds

Blanc Plum Linens has bonds outstanding that pay a 2.5 percent semiannual coupon, have a 3.27 percent yield to maturity, and a face value of $1,000. The current rate of inflation is 2.12 percent. What is the real rate of return on these bonds? 0.86 p..

  How robert wallace should resolve the dilemma

Robert Wallace graduated from Indiana University in 2002 with a BA in history and certification to teach high school social studies. He went right to work as a teacher, but after a few years he found himself increasingly frustrated with his work from..

  What is capital assets pricing model

What is Capital assets Pricing Model? Why is it important? How do information systems affect Market Efficiency?

  Using the straight-line method

Scott Investors, Inc., is considering the purchase of a $371,000 computer with an economic life of four years. The computer will be fully depreciated over four years using the straight-line method. The market value of the computer will be $71,000 in ..

  Determine true risk tolerance

Jennifer Jones wants to accumulate wealth, but she has told you, her new financial planner, that she is risk averse. Determine Jennifer's true risk tolerance.

  Hypothetical treasury securities

Consider the following five hypothetical Treasury securities. What is the implied 1.5 spot rate obtained using bootstrapping? Compare your answer is part (a) to the 1.5 year par rate and explain the difference.

  Find the minimum pretax earnings per year

FIN 508 - Financial Management Assignment. Find the minimum pretax earnings per year that the machine must generate to become profitable

  What is the projects profitability index

Bill plans to open a self-serve grooming center in a storefront. What is the project’s profitability index (PI)?

  Callable bonds be beneficial to an economic entity

Under what types of circumstances would callable bonds be beneficial to an economic entity?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd