What are the upper and lower bounds for these projections

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Reference no: EM133617010

Problem: You are considering a new product launch. The project will cost $1,750,000, have a 4-year life, and have no salvage value; depreciation is straight-line to 0. Sales are projected at 220 units per year; price per unit will be $20,000; variable cost per unit will be $13,000; and fixed costs will be $500,000 per year. The required return on the project is 15%, and the relevant tax rate is 35%. a. Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to within 510%. What are the upper and lower bounds for these projections? What is the base-case NPV? What are the best-case and worst-case scenarios?

Reference no: EM133617010

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