Calculate the best-case and worst-case npv figures

Assignment Help Financial Management

Reference no: EM131871417

We are evaluating a project that costs $732,000, has a six-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 47,000 units per year. Price per unit is $47, variable cost per unit is $30, and fixed costs are $640,000 per year. The tax rate is 35 percent, and we require a return of 12 percent on this project. Suppose the projections given for price, quantity, variable costs, and fixed costs are all accurate to within ±10 percent. Calculate the best-case and worst-case NPV figures. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) NPV Best-case $ Worst-case $

Reference no: EM131871417

Questions Cloud

If the required return on the company common stock : If the required return on the company’s common stock is 11 percent per year, what is the current stock price? Please show work.

How a natural experiment differs from a traditional : Explain how a natural experiment differs from a traditional one by providing an example of each and discussing the differences.

What is the bond nominal yield to maturity : What is the bond's nominal yield to maturity? Would an investor be more likely to earn the YTM or the YTC? What is the current yield?

Determining the decentralized organizational structure : Explain the difference between a centralized and a decentralized organizational structure. Which one is more likely to further the cause of good strategy.

Calculate the best-case and worst-case npv figures : Assume that depreciation is straight-line to zero over the life of the project. Calculate the best-case and worst-case NPV figures.

Explain in detail the the method of job evaluation : Explain in detail the three method of job evaluation, ranking classification, point. Describe which method will benefit a organization given the pros and cons.

What is the implied cost of capital : What is the implied cost of capital? What is the implied cost of capital?

Define the concept of the SGR in medicare policy : Explain the concept of the "SGR" in Medicare policy (i.e. what is it, what's the purpose). How is it becoming "politically difficult" to manage.

Compute the value of this stock : Compute the value of this stock. What is the yield to call of the bond?

User Account

All Pages