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


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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.



Sales Units


Selling Price


Sales Value


Variable Cost


Fixed Cost


Profit Before Depreciation




Profit Before Tax




Profit After Tax


Add: Depreciation


Net Annual Cash Flows...


Paper#9256197 | Written in 27-Jul-2016

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