Considering new product launch

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Reference no: EM132017257

You are considering a new product launch. The project will cost $574,000, have a five year life, and have no salavage value; depreciation is straight time to zero. Sales are projected at 160 units per year, price per unit will be $16,000, variable cost per unite will be$12,500, and fixed costs will be $179,000 per year. The required return is 13.5 percent and the relevant tax rate is 35 percent. Based on experience you think the unit sales variable cost, and fixed cost projections given here are probably accurate to +/- 3 percent. What is the worst case NPV?

Reference no: EM132017257

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