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We are evaluating a project that costs $746,000, has a life of nine years, and...

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Accounting

We are evaluating a project that costs $746,000, has a life of nine years, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 148,000 units per year. Price per unit is $36, variable cost per unit is $22, and fixed costs are $757,190 per year. The tax rate is 23 percent, and we require a return of 15 percent on this project. The projections given for price, quantity, variable costs, and fixed costs are all accurate to within +/- 19 percent.

a. Calculate the best-case NPV.

b. Calculate the worst-case NPV.

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