What are the best- and worst-case scenario npvs

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Question: Scenario Analysis. A project under consideration costs $500,000, has a five-year life, and has no salvage value. Depreciation is straight-line to zero. The required return is 15 percent, and the tax rate is 34 percent. Sales are projected at 400 units per year. Price per unit is $3,000, variable cost per unit is $1,900, and fixed costs are $250,000 per year. No net working capital is required. Suppose you think the unit sales, price, variable cost, and fixed cost projections are accurate to within 5 percent. What are the upper and lower bounds for these projections? What is the base-case NPV? What are the best- and worst-case scenario NPVs?

Reference no: EM131732351

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