Description of this paper

Loading

We are evaluating a project that costs $500,000, has an-(Answered)

Description

Step-by-step Instant Solution


Question

We are evaluating a project that costs?$500,000, has an eight-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 50,000 units per year. Price per unit is $40, variable cost per unit is $25, and fixed costs are $600,000 per year. The tax rate is 35 percent, and we require a 12 percent return 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.


Particulars

 

Sales Units

 

Selling Price

 

Sales Value

 

Variable Cost

 

Fixed Cost

 

Profit Before Depreciation

 

Depreciation

 

Profit Before Tax

 

Tax

 

Profit After Tax

 

Add: Depreciation

 

Net Annual Cash Flows...

 

Paper#9256197 | Written in 27-Jul-2016

Price : $16
SiteLock