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You are considering a new product launch. The project will cost$800,000, have a four-year life, and have no salvage value;depreciation is straight-line to zero. Sales are projected at 200units per year; price per unit will be $18,300, variable cost perunit will be $15,300, and fixed costs will be $630,000 per year.The required return on the project is 12 percent, and the relevanttax rate is 34 percent. a) Based on your experience, you think theunit sales, variable cost, and fixed cost projections given hereare probably accurate to within ±12 percent. What are the best andworst cases for these projections? What is the base-case NPV? Whatare the best-case and worst-case scenarios?
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