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What is the base-case cash flow

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Question

A project has a 7 year life and costs $400,000. Depreciation is straight line to zero over the life of the project and there is no salvage value.

The tax rate is 30% and a 12% return on this project. Sales are expected to be 75,000 units per year.
If the fixed cost per unit is $600,000 per year, the variable cost is $40 per unit and the revenue for each unit is $50:

a) What is the base-case cash flow

b) What is the NPV

Reference no: EM132317125

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