Calculate the worst-case NPV and best-case NPV

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Question - The Prince are evaluating a project that costs $900,000, has a 10-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 160,000 units per year. Price per unit is $32, variable cost per unit is $10, and fixed costs are $650,320 per year. The tax rate is 25 percent, and the company requires a 12 percent return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±12 percent. Calculate the worst-case NPV and best-case NPV?

Reference no: EM132956178

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