Calculate the worst-case and best-case NPV

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Reference no: EM13915397

We are evaluating a project that costs $829,000, has an nine-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 113,000 units per year. Price per unit is $37, variable cost per unit is $21, and fixed costs are $845,580 per year. The tax rate is 37 percent, and we require a 20 percent return on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 13 percent.

Required:

(a) Calculate the best-case NPV. (Do not round your intermediate calculations.)

(b) Calculate the worst-case NPV. (Do not round your intermediate calculations.)

Reference no: EM13915397

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