Transcribed Image Text
The most likely outcomes for a particular project are estimatedas follows:Unit price:$80Variable cost:$60Fixed cost:$440,000Expected sales:40,000units per yearHowever, you recognize that some of these estimates are subjectto error. Suppose that each variable may turn out to be either 5%higher or 5% lower than the initial estimate. The project will lastfor 10 years and requires an initial investment of $1.1 million,which will be depreciated straight-line over the project life to afinal value of zero. The firm’s tax rate is 40% and the requiredrate of return is 14%.b. What is project NPV in the worst-casescenario? (A negative amount should be indicated by a minussign. Enter your answer in dollars not in millions. Do not roundintermediate calculations. Round your answer to the nearest dollaramount.)