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What is project npv in the best case scenario

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Reference no: EM132404444

Unit price: $50

Variable cost:  $30

Fixed Cost: $430,000

Expected Sales: 42,000 units per year

However, you recognize that some of these estimates are subject to error. Suppose that each variable may turn out to be either 10% high or 10% lower than the initial estimate. The project will last for 10 years and requires an initial investment of $1.9 million, which will be depreciate straight line over the project life to a final value of zero. The firm's tax rate is 35% and the required rate of return is 10%.

A. What is project NPV in the best case scenario, that is, assuming all variables take on the best possible value?

B. What is project NPV in the worst case scenario?

Reference no: EM132404444

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