Projections given for price-quantity-variable costs

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Reference no: EM132057324

Firm XXX is evaluating a project that costs $980,000, has a ten-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 52,000 units per year. Price per unit is $40, variable cost per unit is $30, and fixed costs are $530,000 per year. The tax rate is 35 percent, and we require a 15 percent return on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±20 percent. What is the worst-case NPV?

Reference no: EM132057324

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