Sabre is considering opening a new online storefront to supportthe launch of their 'Pyramid' tablet. The severs required tosupport the store will cost $622,000, are expected to have a fiveyear life, and have no salvage value; depreciation is straight-lineto zero. There are no expected NWC requirements.
Sales are projected at 14,000 units per year, price per unit willbe $255.00, variable cost per unit will be $186.00, and fixed costswill be $200,000 per year. The required return is 11 percent andthe relevant tax rate is 34 percent.
Based on your experience, you think the unit sales price andquantity, variable cost, and fixed cost projections given here areprobably accurate to within +/- 9 percent. What is the worst caseNPV? Round your answer to the nearest dollar.
