We are evaluating a project that costs $972,000, has a four-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 88,800 units per year. Price per unit is $35.15, variable cost per unit is $21.40, and fixed costs are $768,000 per year. The tax rate is 35 percent, and we require an 13 percent return on this project.
Required:
Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±10 percent. find out the best-case and worst-case NPV figures
Best-Case NPV?
Worst-Cse NPV?