What is the net present value of the worst-case scenario

Assignment Help Finance Basics

Reference no: EM131997254

Question: The Meldrum Co. is analyzing a proposed project. The company expects to sell 3,000 units, give or take 15 percent. The expected variable cost per unit is $8 and the expected fixed costs are $12,500. Cost estimates are considered accurate within a plus or m inus 5 percent range. The depreciation expense is $4,000. The sale price is estimated at $18 a unit, give or take 2 percent. The project requires $24,000 of fixed assets which will be worthless when the project ends in six years. Also required is $6,500 of net working capital for the life of the project. The tax rate is 34 percent and the required rate of return is 12 percent. What is the net present value of the worst - case scenario? Show your work please.

Reference no: EM131997254

Questions Cloud

Validate the system design using interaction diagrams : ITC508 -You are required to validate the system design using interaction diagrams (i.e., communication diagrams or sequence diagrams) for at least one subsystem

How would you interpret the difference : Melissa is trying to value ABC Company's stock, which is clearly not growing at all. ABC declared and paid a $5 dividend last year.

Key differences between the world : Compare and contrast at least three (3) key differences between the world before 1945 and the world after that year with respect to international relations.

Calculate basic and dilutive earnings per share : Zipper issued in 2012, at par, 75, $1,000, 8% bonds, each convertible into 100 shares of common stock. Calculate Basic and Dilutive Earnings per Share

What is the net present value of the worst-case scenario : The Meldrum Co. is analyzing a proposed project. The company expects to sell 3,000 units, give or take 15 percent. The expected variable cost per unit is $8.

Determine someone fitness for us citizenship : If you had been one of these judges, what question would you ask to determine someone's fitness for US citizenship?

Regards to meeting their economic goals : Do you and others think that a capitalist authoritarian regime has a leg up on democracies in regards to meeting their economic goals?

Explain the methods of assigning costs to ending inventory : For this discussion, identify and explain the four methods of assigning costs to ending inventory and cost of goods sold

Why cloud computing isnt killing the inhouse it data center : My first post here is not a direct contribution to the debate, but rather a genuine technical question to the class and professor about cloud technology.

User Account

All Pages