Projections given for price-quantity-variable costs

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We are evaluating a project that costs $1,666,000, 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 88,300 units per year. Price per unit is $34.90, variable cost per unit is $21.15, and fixed costs are $763,000 per year. The tax rate is 30 percent, and we require a return of 12 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.

Reference no: EM131182130

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