Depreciation is straight-line to zero over life of project

Assignment Help Financial Management

Reference no: EM131073303

We are evaluating a project that costs $1,200,000, has a five-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 88,500 units per year. Price per unit is $35.00, variable cost per unit is $21.25, and fixed costs are $765,000 per year. The tax rate is 35 percent, and we require a return of 10 percent on this project.

Required: Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±10 percent. Calculate the best-case and worst-case NPV figures. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places (e.g., 32.16).)

NPV Best-case $

Worst-case $

Reference no: EM131073303

Questions Cloud

Determine the number of bargaining units : Select an organization with which you are familiar, and determine the number of bargaining units that would be appropriate for its structure. Please use a minimum of one reference to support your discussion.

Doctors in healthcare mergers and acquisitions : Explain in detail the limits that the Stark Amendment applies to doctors in healthcare mergers and acquisitions involving their medical practice. List the possible legal actions a hospital may face if found violating the Stark Amendment.

The value of portfolio of treasury bonds : Explain why each of the independent statements below is false. A good explanation should be between two and four sentences for each part. A mutual fund manager is concerned that the value of a portfolio of Treasury Bonds (average maturity = 15 years)..

New approaches to administration : Educational administrators are bombarded by possible innovations at all educational levels. Programs to upgrade maths, science and social science education, state accountability plans, new approaches to administration, and other ideas are initiate..

Depreciation is straight-line to zero over life of project : We are evaluating a project that costs $1,200,000, has a five-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 88,500 units per year. Calculate the best-case a..

Does hd chocolate use the direct or indirect method : What is the purpose of the statement of cash flows? From this statement of cash flows how does it appear the purchase of equipment was financed? Does HD Chocolate use the direct or indirect method of presenting cash flows from operations?

Promoting protection training : 1. Produce a couple of different challenges you have experienced to promoting protection training, and determine if there are any parallels between your group.

What was net capital spending : Bowyer Driving School’s 2014 balance sheet showed net fixed assets of $3.8 million, and the 2015 balance sheet showed net fixed assets of $4.1 million. The company’s 2015 income statement showed a depreciation expense of $415,000. What was net capita..

Issues zero coupon bonds-yield to call : Atlantis Fisheries issues zero coupon bonds on the market at a price of $447 per bond. These are callable in 6 years at a call price of $520. Using semiannual compounding, what is the yield to call for these bonds?

User Account

All Pages