Depreciation is straight-line to zero over life of projects

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We are evaluating a project that costs $1089458, has a seven-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 40651 units per year. Price per unit is $47, variable cost per unit is $27, and fixed costs are $818159 per year. The tax rate is 33 percent, and we require a 11 percent return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/-10 percent. What is the NPV of the project in worst-case scenario?

Reference no: EM13938491

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