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We are evaluating a project that costs $744,000, has a six-yearlife, and has no salvage value. Assume that depreciation isstraight-line to zero over the life of the project. Sales areprojected at 45,000 units per year. Price per unit is $60, variablecost per unit is $20, and fixed costs are $740,000 per year. Thetax rate is 35 percent, and we require a return of 18 percent onthis project. Suppose the projections given for price, quantity,variable costs, and fixed costs are all accurate to within ±10percent. Calculate the best-case and worst-case NPV figures.
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