Projections given for price-quantity-variable costs

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Reference no: EM13917358

We are evaluating a project that costs $1,638,000, 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 87,900 units per year. Price per unit is $34.70, variable cost per unit is $20.95, and fixed costs are $759,000 per year. The tax rate is 35 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. (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: EM13917358

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