Calculate the worst-case npv and best-case npv

Assignment Help Financial Management

Reference no: EM132045044

We are evaluating a project that costs $734,000, 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 109,000 units per year. Price per unit is $44, variable cost per unit is $26, and fixed costs are $742,808 per year. The tax rate is 37 percent, and we require a 18 percent return on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 18 percent.

Required:

(a) Calculate the best-case NPV.

(b) Calculate the worst-case NPV.

Reference no: EM132045044

Questions Cloud

What happens when money moves everything : What sort of impact do economics and business have on an individual's "values"? What happens when money moves everything (e.g. cultural, political, and moral)?

What price should a profit maximizing firm choose : Profit maximizing firms set MR = MC to choose the profit maximizing Q and P;

Define the ethical breeches in detail : Define the ethical breeches that have occurred and how these relate to business. Identify business communication processes that could have prevented.

Blue bobbleheads for firm to make and sell : What are the profit maximizing quantities of red and blue bobbleheads for this firm to make and sell?

Calculate the worst-case npv and best-case npv : We are evaluating a project that costs $734,000, has an eight-year life, and has no salvage value. Calculate the best-case NPV. Calculate the worst-case NPV.

What will be the price of the mbi stock : If dividend growth forecasts for MBI are revised downward to 6% per year, what will be the price of the MBI stock?

How does a company goals : How does a company's goals, constraints, incentives and market rivalry affect its economic decision-making?

How did you shape your argument to needs of your audience : Describe a time you demonstrated resistance at work. Why did you resist? What was the outcome? How did you shape your argument to the needs of your audience?

How much labor does the firm hire : The production function is Q=L, and the labor supply curve is w=10+L. How much labor does the firm hire? What wage is paid?

User Account

All Pages