Projections given for price-quantity-variable costs

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You are evaluating a project that costs $840,000, has 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 90,000 units per year. Price per unit is $40, variable cost per unit is $24, and fixed costs are $900,000 units per year. Tax rate is 40%, and you require a 12% return on this project.

Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 10%. Calculate the best-case and worst-case NPV figures.

Reference no: EM13731573

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